Buying property in Dubai while resident in India: what Indian law requires before, during and after

Short answer: a person resident in India may buy property in Dubai only with money sent under the Liberalised Remittance Scheme (LRS): up to USD 250,000 per person per financial year, from their own funds, through an Indian bank. Whatever each person sends above ₹10 lakh in a financial year carries 20% tax collected at source (TCS), which is an advance of tax you get back, not a cost. A mortgage from a UAE bank is not available to a resident on the general permission. Once bought, the property goes into Schedule FA of every return, and leaving it out exposes you to a ₹10 lakh penalty per year that no small-asset threshold excuses.

This page sets out what Indian law requires if you buy. It does not discuss whether to buy, what to buy, or at what price.

The route at a glance

The FEMA permission and the LRS limit

Under the Foreign Exchange Management Act, 1999 (FEMA), a resident may acquire property abroad only as the rules permit. The operative provision is Rule 21 of the Foreign Exchange Management (Overseas Investment) Rules, 2022, which from 22 August 2022 replaced the FEMA (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015. Rule 21 allows a resident to buy property abroad out of funds remitted under the LRS, out of a Resident Foreign Currency account, jointly with a relative who lives abroad, or out of income or sale proceeds of assets already lawfully held abroad.

The LRS is RBI's scheme for resident individuals. Its Master Direction sets the limit at USD 250,000 per financial year (April to March) and lists acquisition of immovable property abroad as a permitted purpose, alongside overseas direct and portfolio investment. Three points decide most cases:

• The limit is per person and covers everything. Education, travel, gifts and investment remittances in the same year all count towards the same USD 250,000.
• It resets each 1 April. An off-plan purchase paid across three financial years can use three years' limits. How that maps onto a real payment plan is worked through in Dubai off-plan payment plans and LRS.
• It is in dollars. The dirham is pegged at 3.6725 to the US dollar, so USD 250,000 is about AED 918,000, whatever the rupee does.

A personal purchase in your own name is neither overseas direct investment (ODI) nor overseas portfolio investment (OPI), and needs no ODI reporting. Buying through a company is a different matter: a resident cannot make ODI in a foreign entity engaged in real estate activity (Rule 19 of the same Rules), which covers buying and selling property. Do not let anyone set up a Dubai company to hold the flat for you without that being examined first.

Buying with family: how the limits combine

RBI allows remittances to be consolidated across family members, each complying with the Scheme, but does not allow clubbing for a capital account transaction by a family member who is not a co-owner of the investment. The test is simple: anyone whose LRS limit is used must be on the sale agreement and the title.

Three cautions:

• Each co-owner remits from their own bank account, under their own PAN, and signs their own Form A2. If one spouse funds the other's share by gift, document the gift; the bank will ask where the money came from.
• Gifted money brings the clubbing rule with it. Rent and gains from a share funded by a gift from a spouse are taxed in the hands of the spouse who gave the money (section 64 of the 1961 Act; the 2025 Act equivalent should be checked before relying on it for tax year 2026-27 onwards). Joint ownership does not split the tax unless the money was genuinely each owner's own.
• Ownership shares should match the money. The title, the remittance trail and each owner's Schedule FA should tell the same story.

At the bank: Form A2, the LRS declaration and source of funds

Every LRS remittance goes through an authorised dealer (AD) bank, an Indian bank licensed by RBI to deal in foreign exchange. Expect to provide:

Pay from your own account in India to the account the contract names, usually the project's escrow account in Dubai. Payments routed through an agent's account, a relative's UAE account or cash break the trail that the bank and the tax department will both rely on. The year's remittance total in the declaration is your statement: a bank cannot see what you sent through another bank.

TCS: 20% above ₹10 lakh, and how it comes back

Money sent to buy property abroad is collected at 20% on the part of the year's LRS remittances above ₹10 lakh, under section 394 of the Income-tax Act, 2025 from 1 April 2026 (section 206C(1G) of the 1961 Act before that). The ₹10 lakh is per person and aggregates every LRS remittance in the year.

That ₹28 lakh is credited to your PAN, reduces the tax payable for the year, and any excess is refunded once the return is processed. A salaried buyer can declare it to the employer in Form 122 and have salary TDS reduced instead. The three recovery routes are in TCS on foreign remittances in 2026. Each co-owner has their own ₹10 lakh each year, which reduces the amount collected but not the tax finally paid.

No foreign mortgage

The FEMA (Borrowing and Lending) Regulations, 2018 prohibit a resident from borrowing in foreign exchange except in the cases they list. For an individual those are an interest-free loan of up to USD 250,000 from a relative abroad, on RBI's conditions, and loans for study abroad. A UAE bank loan for a Dubai property is not among them and would need RBI's specific permission. The Indian side is closed too: the LRS Master Direction bars banks from extending credit to individuals for capital account remittances under the Scheme.

So a resident pays from their own resources. Post-handover instalment plans, and a buyer who moves to the UAE mid-plan, are covered in the off-plan post.

Off-plan payment schedules

Most purchases offered to Indian buyers are off-plan: a unit not yet built, paid in instalments over construction and at handover. Plan each instalment against each buyer's limit for the year it falls in; a large handover payment is where single buyers run out of room. The Dubai Land Department (DLD) registration fee, currently 4% of the price, is usually due at booking and is remitted under the LRS with the down payment, in year one.

Every year after: Schedule FA, Schedule AL and the return

Once you hold the property, or have paid towards it, it belongs in Schedule FA of the return for as long as you are resident and ordinarily resident. The schedule covers the calendar year ending 31 December within the financial year: the return for AY 2026-27 (FY 2025-26) reports what you held in calendar 2025. The forms for tax year 2026-27 under the 2025 Act are not yet notified; check the period they use when they are.

Foreign property goes in the immovable property table (Table C):

The form gives no instruction for a unit still under construction. The cautious course is to report it from the first calendar year in which you paid anything, with the amount paid to date as cost. The schedule's general mechanics are in Schedule FA from your broker statement.

Use ITR-2, or ITR-3 with business income; ITR-1 and ITR-4 have no Schedule FA. Holding a foreign asset obliges you to file even below the taxable limit, and Schedule AL (required in the AY 2026-27 ITR-2 where total income exceeds ₹1 crore) includes the property too.

Why this is the field not to miss. Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 allows a penalty of ₹10 lakh for each year a resident leaves a foreign asset out of a return. Since 1 October 2024 it does not apply to foreign assets worth up to ₹20 lakh, but that threshold expressly excludes immovable property. A Dubai flat is outside it at any value, as set out in the ₹20 lakh Black Money Act threshold.

Rent and sale

Rent from the flat is taxable in India in the year it arises if you are resident and ordinarily resident, under the head "income from house property". The UAE does not tax an individual's rent from a personally held property, so there is usually no foreign tax to credit. The computation, the deductions and how the rent shows in Schedule FA and Schedule FSI are in Dubai rental income and Schedule FA.

Sale is taxed in India as capital gains (section 45 of the 1961 Act; section 67 of the 2025 Act). Under the LRS Master Direction, sale proceeds not reinvested must be repatriated to India and surrendered within 180 days. Both are in selling Dubai property: capital gains in India.

Residence, the Golden Visa and the treaty

Buyers are often told that a UAE residence visa, including the long-term "Golden Visa", changes their Indian tax position. It does not.

A person who lives in India and visits Dubai remains resident, reports the flat and pays Indian tax on the rent. Someone returning to India with a Gulf flat already bought should read the RNOR window before their first return as a resident.

Already bought, and never reported?

A flat bought with taxed money sent through a bank can be regularised under FAST-DS 2026 for a flat ₹1,00,000 if it is worth no more than ₹5 crore, until 31 December 2026. The routes are in bought property in Dubai and never reported it? and the scheme in FAST-DS 2026, explained.

This note sets out the Indian foreign exchange and income-tax requirements for a resident individual buying property abroad, as they stand on the date above: Rule 21 of the FEMA (Overseas Investment) Rules, 2022, RBI's Master Direction on the Liberalised Remittance Scheme as published on its website, the FEMA (Borrowing and Lending) Regulations, 2018, section 394 of the Income-tax Act, 2025 and the Schedule FA requirements of the current return forms. It is not advice on any individual's position and says nothing about whether any property is a sound purchase; the practice does not broker property or take commissions from developers or agents. Dubai fees and procedures are as commonly published and should be confirmed with the Dubai Land Department. Confirm each buyer's residential status, LRS headroom for the year and the AD bank's documentation requirements before the first payment.