The Reserve Bank of India's framework for sending money abroad to buy property is neither complicated nor hostile to Indian buyers. It is simply specific. This is the complete guide to getting it right.
FEMA — the Foreign Exchange Management Act of 1999 — is the framework under which every Indian rupee moves across India's borders. The Liberalised Remittance Scheme (LRS), introduced by the RBI in 2004, is the practical mechanism within FEMA that allows resident individuals to remit funds abroad for permitted purposes. Buying overseas property is one such permitted purpose.
What follows is the complete FEMA and LRS reference for Indian buyers of Dubai property. This is the guide I walk new clients through before they commit to a purchase.
Under LRS, every resident Indian — including minors through guardians — may remit up to USD 250,000 per Indian financial year (April to March) for permitted capital and current account transactions. The limit is global across all LRS purposes combined: overseas travel, gifts, education, investments, property. Once you have used USD 50,000 for travel, your remaining property headroom that year is USD 200,000.
LRS transactions run through authorised dealer banks using Form A2, with a specific purpose code identifying the nature of the remittance. For overseas real estate, that code is S0005. Using the wrong code — for example, declaring property funds as "travel" or "gift" — is a FEMA contravention.
The USD 250,000 cap is per individual, not per household. For property above ₹2 crore, Indian families almost always use pooling: multiple family members become co-owners and each remits their own annual LRS quota.
A family of four adults (two parents, two adult children, or any combination) can legally remit USD 1 million in a single financial year — approximately ₹8.4 crore at current rates. For off-plan properties with payment plans spreading 2–5 years, the same pooled family can comfortably fund purchases of ₹15–40 crore without breaching individual caps.
Pooling requires real ownership structure, not cosmetic co-signing. Each co-owner must:
Since 2023, Tax Collected at Source applies to LRS remittances. For Dubai property, the rate is 20% on amounts exceeding ₹7 lakh per financial year.
This is not a tax. The TCS appears as a credit in your Form 26AS and is adjusted against your total tax liability when filing ITR, with any excess refunded. On a ₹2 crore property remittance, expect approximately ₹40 lakh TCS to be collected, which you recover at ITR filing (typically 12–18 months later).
Budget this as a cashflow item, not a tax item. If your cash position is tight, the TCS on a large Dubai property purchase can temporarily lock significant capital.
Every LRS remittance is made via Form A2 at an authorised dealer bank (your regular Indian bank). Form A2 declares the purpose of remittance, the amount, and the recipient. For Dubai property, the required supporting documents typically include:
Most established banks (HDFC, ICICI, Axis, SBI) process LRS for overseas property within 48 hours once documents are complete. For first-time LRS remittances, budget an extra 2–3 days for bank internal verification.
Owning overseas property as a resident Indian triggers an annual disclosure obligation. Schedule FA (Foreign Assets) is part of the Income Tax Return and must be filed every year you hold the property — regardless of whether you earned any income from it that year.
Schedule FA requires:
Non-disclosure is a serious offence under the Black Money (Undisclosed Foreign Income and Assets) Act, carrying penalties up to 300% of tax evaded plus potential imprisonment. Given India's information-sharing treaties with the UAE active in 2026, undisclosed property is relatively easy for tax authorities to identify.
The compliant path attracts no scrutiny. The non-compliant path saves a little friction now and invites significant liability later. I strongly recommend the former for every client.
USD 250,000 per resident individual per Indian financial year (April to March). This cap applies to all LRS purposes combined — travel, gifts, investments, property. Cannot be increased for individual applicants. Family pooling is the standard way to fund larger purchases.
Yes, but the USD 250,000 cap is shared across all purposes. If you have used USD 100,000 for overseas education fees, your property headroom that year is USD 150,000. Plan family allocations carefully if multiple large overseas expenses are expected.
Banks are required to enforce the cap at the remittance level — you will not be able to wire more than USD 250,000 from a single account in a financial year. If somehow excess remittance occurred, the RBI has a compounding process for voluntary disclosure with reduced penalties. Consult a CA immediately.
Form 15CA is required for every foreign remittance above ₹5 lakh. Form 15CB (CA certification) is required for remittances above ₹5 lakh where the remittance is not covered in the specified exemption list. For Dubai property purchases above ₹5 lakh per transaction, both forms are typically required.
Yes. Schedule FA is triggered by ownership, not by income. Every year you hold overseas property, disclosure is required even if the property generated zero rental income that year. The peak value for the year and cost of acquisition must still be reported.
Both are prepayment mechanisms adjusted at ITR filing. TDS (Tax Deducted at Source) is deducted from income before payment (salary, interest, etc). TCS (Tax Collected at Source) is collected on certain transactions — foreign remittances, motor vehicle sales above ₹10 lakh, etc. Both appear in Form 26AS as credits against your final tax liability.
FEMA questions are specific to each buyer. Share your situation on WhatsApp for high-level guidance — we will always recommend you confirm specifics with a qualified CA before acting.
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