Buying property in Dubai from India: the remittance rules and the tax to know

The Liberalised Remittance Scheme (LRS)

Under the Reserve Bank of India's Liberalised Remittance Scheme, an Indian resident individual may remit up to USD 250,000 (roughly AED 918,000 at the UAE Central Bank peg of 3.6725 per USD) in each financial year running from April to March. Purchasing immovable property abroad is one of the permitted purposes under the scheme, confirmed by the RBI's own LRS FAQs.

For a Dubai purchase above USD 250,000 in a single financial year, the buyer would need to spread the remittance across two financial years, or explore other mechanisms available to them, which would be a question for their bank or adviser. Remittances for immovable property cannot be made to countries on the RBI's restricted list; the UAE is not on that list.

The LRS applies to resident individuals. Non-resident Indians (NRIs) and persons of Indian origin who are tax-resident outside India have separate rules for foreign remittances and different FEMA provisions: this guide is addressed to resident Indians.

Tax collected at source (TCS) on the remittance

When an Indian resident remits funds abroad under LRS for purposes other than overseas education and medical treatment, the bank that processes the transfer collects Tax Collected at Source (TCS) at 20% on the amount remitted above INR 10 lakh (approximately USD 12,000 at current rates) in a financial year.

This is not an extra cost to budget separately: TCS is an advance payment against the remitter's own income tax liability for that year, and it appears in their Form 26AS. The amount collected as TCS can be claimed as a credit when the buyer files their income tax return for the year. Buyers who pay little or no income tax in India, or whose total tax liability is below the TCS collected, can apply for a refund through their return.

The 20% rate on LRS remittances above INR 10 lakh was set by the Union Budget of 2023 and kept in place by the Union Budget of 2026. The Union Budget 2026 reduced TCS rates for education and medical travel to 2% from 1 April 2026 but left the 20% rate for other purposes, including property purchases abroad, unchanged.

FEMA and the permitted purpose

The Foreign Exchange Management Act (FEMA) and its regulations govern how Indian residents deal in foreign exchange. Purchasing property abroad under LRS is a current account transaction that does not require prior RBI approval: the authorised dealer bank (the bank processing the remittance) handles it directly, within the scheme's conditions.

The buyer must complete Form A2, the application for outward remittance, at the time of transfer, declaring the purpose as the purchase of immovable property abroad. Maintaining the records of the purchase and the remittance, including the Form A2 and the SPA, is the buyer's responsibility and is required by FEMA's record-keeping provisions.

The Dubai side of the purchase

On the Dubai side, there is no restriction on Indian nationals purchasing property in the designated freehold areas, and no requirement to involve the Indian government or RBI in the Dubai registration process. The Dubai Land Department registers the title, and the purchase follows the same steps as for any other international buyer.

For an off-plan purchase, payments from the remittance are made into the project's escrow account at an approved bank in the UAE. The SPA, which governs the payment plan, is the buyer's main document. Our guide to Dubai off-plan payment plans covers how those payments fall due.

What a tax adviser covers

The remittance side of buying property in Dubai from India is well defined under LRS and FEMA. The questions that sit outside that framework are for a tax adviser with cross-border expertise:

Whether rental income received from a Dubai property is taxable in India, and how to declare it. How a future gain on sale is treated for Indian capital gains tax. How the TCS collected can be most efficiently credited against income tax liability. Whether the buyer's own circumstances, including any NRI status or recent change of tax residency, affect the rules above.

Augusta Properties is a Dubai-licensed real estate brokerage. We present properties, guide buyers through the Dubai purchase process, and answer questions about the Dubai market. Questions about Indian tax are for an Indian tax adviser, and we recommend speaking to one before signing anything.