Indian buyers investing in foreign real estate, especially in Dubai, have been warned against using the International Credit Card (ICCs) for down payments. Such transactions can violate Indian foreign exchange laws and attract serious legal and financial results. Experts urged buyers to urge the Reserve Bank of India (RBI) liberal remittance scheme (LRS) and FEMA rules to be strictly followed to avoid regulatory investigation and punishment.
Using International Credit Card for Property Purchase is risky
Indian real estate and tax experts emphasize that international credit cards are specially designed for current account transactions – such as shopping, travel and education – foreign property investment such as capital account transactions.Under Indian law, especially Foreign Exchange Management Act (FEMA), purchasing property abroad is classified as a capital account transaction. ICCs are allowed only for current account transactions, meaning that using them for property payment violates both fema and RBI guidelines.Anderson UAE CEO Anurag Chaturvedi explains that the RBI’s approved structure for such investments is the liberal remittance scheme (LRS), which allows Indian residents to take out a time of up to $ 250,000 per financial year through banks authorized with full regulatory overs. By paying the LRS by paying with ICCs, the FEMA violates the rules and can trigger the investigation by the RBI and other authorities.
Regulatory investigation and legal implication
Recent cases have been reported, where Indian citizens have either including the RBI and Enforcement Directorate (ED) under the scanner by Indian regulators – to buy property through ICCs in Dubai – either through the developer payment link or during the trips. These officials are investigating whether the use of the ICCs circumference established the remittance channels, violated FEMA and possibly prevention of the Money Laundering Act (PMLA).Risk punishment for violations of buyers using ICCs, FEMA and PMLA provisions, if the transactions for potential tax liabilities avoid tax collection on the transaction source (TCS), and if money laundering doubts arise, legal action. Some individuals may be forced to reversed their payment through authorized banking channels under LRS to regularize their property purchase and complete the transaction.Gaurav Keswani, CEO of JSB Corporation, emphasized that ICC payments for foreign assets are not align with the RBI guidelines and LRS limits, which require a complete documentation for at least a year and a bank account supported by a bank account.
Financial and economic risk to use ICCs
Beyond legal results, the financial shortcomings of using the International Credit Card for such high-value transactions are considerable. ICC payment includes high interest rate, foreign exchange markup, late fee and punishment, making this method financially unfair.Chaturvedi said that this practice is legally risky and economically unheard. He recommends buyers to use LRS through registered banks, ensuring that all transactions are properly documented, and experts seek legal or financial advice before investing abroad.He briefly said briefly, “Buying a property abroad with an international credit card is like trying to pay for a house with a travel wallet – it is not allowed, and it can put you in serious trouble.” Buyers are encouraged to follow authorized banking and regulatory procedures to avoid complications.
Recommendations for Indian property buyers
- Use liberalized remittance scheme: Indian inhabitants should pay funds for foreign property investment through authorized banks within the $ 250,000 annual LRS limit.
- Maintain extensive documentation: Keep all receipts, bank statements and correspondence related to property transactions to ensure transparency and compliance.
- Get professional advice: Consult legal or financial experts specialized in FEMA, RBI rules and international property transactions.
- Answer the regulator inquiry immediately: Add any notice or investigation to the authorities to reduce risks.
- Avoid partial ICC payment: Some developers accept small down payment reserves (usually under DH80,000), but full payment should follow Indian laws.
