Indian Buyers Investing In Overseas Real Estate, Particularly in Dubai, Have Been Cautioned Against Using International Credit Cards (ICCs) for Down Payments. Such transactions can Violate Indian Foreign Exchange Laws and Attract Serious Legal and Financial Consequences. Experts Urge Buyers to Comply Strictly With the Reserve Bank of India’s (RBI) Liberalized Remittance Scheme (LRS) and Fema Regulations to Avoid Regulatory Scrutiny and Penalties.
Why Using International Credit Cards for Property Purchasses is Risky
Indian Real Estate and Tax Specialists Emphasize that International Credit Cards are designed exclusively for Current Account Account Transactions – SUCH As Shopping, Travel, and EDUCATAL COCICATAL COCOTAL COCOUL Transactions like overseas property investments.Under Indian Law, Specifically the Foreign Exchange Management Act (FEMA), Purchasing Property Abroad is Categorized as a Capital Account Transaction. ICCs are only permitted for Current Account Transactions, Meaning that Using Them for Property Payments Violates Both FEMA and RBI Guidelines.Anurag Chaturvedi, CEO of Andersen UAE, explains that the RBI’s approved framework for such investments is the liberalized Remittance Scheme (LRS), which allows indiaan residence to reference to reference to $ 250,000… Financial Year Through Authorized Banks with full regulatory oversight. Bypassing the Lers by paying with ICCS Contravenes Fema Rules and Can Trigger Investigations by the RBI and other authorities.
Regulatory scrutiny and legal implications
Recent cases have emerged where Indian nationals purchasing property in Dubai Via ICCS – Either through Developer Payment Links or during Visits – are No Under the Scanner by Indian Regulators, Incloren Regulators The Enforcement Directorate (ED). These Authorities are probing wheether the use of ICCS Circumvents Establed Remittance Channels, Violating Fema and Possibly the Prevention of Money Laundering Act (PMLA).Buyers Using ICCs Risk Penalties for Breaching FEMA and PMLA Provisions, Potential Tax Liability Arise. Some individuals may be forced to reverse their payments and complete transactions through Authorized Banking Channels under the Lers to regularize their Property Purchases.Gaurav Keswani, CEO of JSB Incorporation, Stresses that ICC Payments for overseas property are not aligned with rbi guidelines and the lers limit, which require remittains to be condukti Banks, supported by thorough documentation and a bank account help for at least one year.
Financial and Economic Risks of Using ICCs
Beyond Legal Consequences, The Financial Drawbacks of Using International Credit Cards for Such High-Value Transactions are Consideable. ICC Payments Involve High Interest Rates, Foreign Exchange Markups, Late Fees, and Penalties, Making This Method Economically Improvement.Chaturvedi highlights that this practice is bothe risky and financially unsound. He advises boyers to utilize the lers through registered banks, ENSURE all transactions are properly documented, and seek expert legal or final advice before invoice algate.He successfully summarizes, “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 COLD GET You Into Serials Trouble.” Buyers are encouraged to follow autorized banking and regulatory procedus to avoid complications.
Recommendations for Indian Property Buyers
- Use the Liberalized Remittance Scheme: Indian Residents Should ReMit Funds for overseas property investments through authorized banks with the $ 250,000 annual lers limit.
- MainTain Comprehensive Documentation: Keep All Receipts, Bank Statements, and CORRESPONDENCE to Property Transactions to ENSURE Transparency and Compliance.
- Seek professional advice: Consult legal or financial experts Specializing in FEMA, RBI Regulations, and International Property Transactions.
- Respond to regulatory inquiry promptly: Address any notices or investigations from authorities immediatily to mitigate risks.
- Avoid partial icc payments: Some developers accept small down payment reserves (usually under DH80,000), but the full payment Must Comply with Indian Laws.
