Indian buyers in Dubai face new rules. They used international credit cards for property. This bypassed normal money transfer systems. The Reserve Bank of India (RBI) has guidelines. These rules cover money leaving India. Buying property is a capital transaction. Credit cards are for everyday spending. This includes things like hotels or books.
Using credit cards for property goes against these rules. Buyers did this through links or during visits. It seemed easy and avoided taxes. Now, authorities are looking into it. Buyers want to fix this through the LRS. This scheme allows sending money abroad. They plan to cancel credit card payments. They will tell builders it was a mistake. Then, they hope to get their money back. If not, they might have to sell the property.
Experts say this is not allowed. The RBI treats property buys as capital movements. Credit card use for this is seen as wrong. Some buyers are asking the RBI to help. They hope the RBI will be lenient. They think the payment method was the only issue. Others are quietly canceling their cards.
The LRS allows $250,000 yearly abroad. This includes online buys. Credit card spending in India counts. Travel abroad is different. Property bought with credit cards is not allowed. RBI rules require keeping bank accounts open. This must be for a year before sending money.
Buying property overseas needs following specific rules. These rules allow buying through inheritance or gifts. It also allows using money from past foreign accounts. Sending money under LRS is also permitted. General permission doesn’t cover credit cards. So, these deals need fixing. This means getting approval later. It could also mean selling the property.
Property sales abroad still face taxes. This tax applies no matter how the money moves.