Buying Dubai Property from India

Why this corridor

RBI Liberalised Remittance Scheme (LRS)

The limit is per individual — including minors — and is cumulative across ALL purposes (property, education, travel, investments, gifts). It applies to resident individuals only. HUFs, corporates and trusts are NOT eligible for LRS. At current rates the limit is roughly ₹2.1–2.2 crore per person per year.

Family pooling

A family of four can therefore remit up to USD 1,000,000 in a single financial year. CRITICAL: if funds are pooled from multiple family members, each contributing member must generally be recorded as a co-owner on the title. Pooling funds while registering the property in one person's name is a compliance risk. Structure ownership BEFORE remitting, not after.

Correct purpose code

Every outward remittance requires Form A2 and an LRS declaration. Using the wrong purpose code can trigger reporting mismatches, compliance notices, complicate later repatriation of sale proceeds, and in some cases prompt the bank to report the transaction directly to the RBI. This is the single most common avoidable error in this corridor.

Tax Collected at Source (TCS) on the remittance

For investment-purpose remittances (which includes overseas property), TCS is 20% on the cumulative amount exceeding ₹10 lakh in a financial year. Budget 2026 REDUCED TCS to 2% for education and medical remittances effective 1 April 2026 — but investment remittances were explicitly left at 20%. Do not confuse the two.

TCS is NOT a cost — it is advance tax. It is deposited against your PAN, appears in Form 26AS and the Annual Information Statement, and is fully creditable against your total tax liability when you file your ITR (or refundable if you have no liability). BUT it is a genuine CASH-FLOW event: on a ₹1.5 crore remittance, roughly ₹28 lakh is collected upfront and remains blocked until your return is processed and any refund issued. That capital must be planned for, and no interest is paid on it while the government holds it.

Financial-year timing

THE most important fact in this corridor — and the most commonly misrepresented

NRI or RNOR: Dubai rental income is foreign income and is NOT taxable in India. You keep 100% of it, and the UAE taxes nothing. This is the scenario Dubai property marketing almost always assumes. RESIDENT (ROR) of India: Dubai rental income IS taxable in India at your slab rate — up to 30% plus cess — after a 30% standard deduction for maintenance. The India–UAE DTAA does NOT exempt this income; it operates on the CREDIT method, meaning India taxes the income and gives you credit for tax paid in the UAE. Since the UAE levies zero personal income tax, there is zero credit to give — so you pay the full Indian tax. This was confirmed by the Income Tax Appellate Tribunal, relying on CBDT Notification No. 90 (2008) interpreting the 'may be taxed' language in Article 6 of the treaty. The practical effect: an Indian tax resident buying a Dubai apartment does NOT get tax-free rental income. A large volume of marketing aimed at Indian buyers implies otherwise. It is wrong.

Vacant property still taxable for Indian residents

Capital gains on sale of Dubai property

For an NRI, the UAE charges no capital gains tax and India taxes only India-sourced income — so a gain on a Dubai sale is taxed nowhere. For an Indian resident, worldwide income is taxable in India and the same DTAA credit-method logic applies: zero UAE tax means zero credit, so the Indian liability stands in full.

Schedule FA reporting — mandatory, and heavily penalised

Foreign assets above ₹7 lakh and all foreign bank accounts must be reported. Non-disclosure carries penalties of up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) Act — per year, per undisclosed asset. India now receives automatic financial-account data from the UAE under the Common Reporting Standard (CRS) and AEOI framework, so undisclosed Dubai holdings are increasingly detectable. This obligation applies regardless of whether the property generates income.

Tax Residency Certificate (TRC) and Form 10F

A UAE TRC is issued by the UAE Federal Tax Authority and requires physical presence in the UAE of 183+ days within any 12 consecutive months (any part-day counts as a full day; days need not be consecutive). Processing typically takes 2–4 weeks via the FTA portal. Form 10F must be filed electronically with the Indian Income Tax Department. Note: a UAE Golden Visa does NOT by itself make you a UAE tax resident — the treaty and UAE law look at actual residency factors (day count, domicile, centre of vital interests), not visa status. Confusing the two is a frequent and costly error.