Dubai: Indian Property Buyers Warned Against Using International Credit Cards To Buy Property

Indian property buyers have been warned against using international credit cards to make a down payment as it involves risks and violations of the laws of some countries.

Real estate and tax experts said that credit card usage is meant for current account transactions only such as shopping and travel, hence, it is best to avoid using international credit cards for any form of foreign investment.

Some Indian buyers reportedly faced regulatory issues when buying property in Dubai through international credit cards.

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Anurag Chaturvedi, CEO of Andersen UAE, said under Indian law, specifically the Foreign Exchange Management Act (Fema), property purchases abroad are treated as capital account transactions. However, international credit cards (ICCs) are only permitted for current account transactions, such as travel, shopping, and education-related payments.

“Using an international credit card to pay for real estate abroad bypasses the Reserve Bank of India's (RBI) approved framework, namely the Liberalised Remittance Scheme (LRS), which is the only legal channel for Indian residents to invest in overseas property,” Chaturvedi told Khaleej Times.

The Liberalised Remittance Scheme allows Indian residents to remit up to $250,000 per financial year through authorised banks, ensuring tax compliance, reporting, and regulatory oversight.

He said the RBI has explicitly clarified that ICC usage for real estate, being a capital outflow, must follow Liberalised Remittance Scheme norms.“Therefore, bypassing this process amounts to a violation of Fema,” he said.

Some developers accept a portion of the down payment to be used as a reserve, allowing property buyers more time to complete the transfer of payments. This reserve is usually less than Dh80,000.

Gaurav Keswani, CEO of JSB Incorporation, said Indian investors considering property purchases in Dubai should ensure compliance with India's regulatory framework.

“The use of international credit cards for such transactions, while seemingly convenient, does not align with Fema and LRS norms. These cards are designated for current account transactions – not capital account investments like real estate,” he said.

He added that as per RBI guidelines, remittances for overseas property must be made through authorised banks under the $250,000 LRS limit, with proper documentation and a bank account held for at least one year.

According to Anurag Chaturvedi, using international credit cards for property purchases abroad can result in significant legal and financial consequences, including investigations and penalties from authorities.

These include breach of Fema regulations, and the offender may face investigations by the RBI, Income Tax Department, Enforcement Directorate (ED), in addition to legal risk as using ICCs is financially imprudent, as it involves high interest rates, foreign exchange mark-ups, and potential late fees and penalties.

“These risks are not only regulatory but also economic, making this practice both legally risky and financially unsound,” he added.

Chaturvedi advised property buyers to use the Liberalised Remittance Scheme through a registered bank, ensure all transactions are fully documented and reported as required by RBI and tax authorities, and consult a financial advisor or legal consultant before committing to any cross-border investment.

“Buying property abroad with an international credit card is like trying to pay for a house with a travel wallet – it's not permitted, and it could get you into serious trouble. For peace of mind and legal clarity, always follow the proper banking and regulatory channels when investing abroad,” he added.

Gaurav Keswani stressed that it is important that all stakeholders, including developers and agents, promote transparent and compliant processes.

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