Indian citizens, resident and non-resident, can own freehold property in Dubai's designated areas in their own name, and they have been the largest single nationality among buyers for most of the last decade. The mechanics of the purchase are the same as for anyone else. What differs is how the money leaves India, what it is worth when it arrives, and what has to be reported at home. This article covers those three things and stops, deliberately, at the boundary where your own tax adviser takes over.
Residents of India: the Liberalised Remittance Scheme
A resident individual can currently remit up to USD 250,000 per financial year under the Reserve Bank of India's Liberalised Remittance Scheme, for permitted purposes that include the purchase of immovable property abroad. The limit is per person, so a couple buying jointly can each use their allowance, and family members who will be co-owners can pool theirs for a single property. For a purchase above the annual limit, an off-plan payment plan can be timed so that instalments fall in different financial years — one of the few cases where a plan structure has a specific advantage for a specific buyer.
Your bank will ask for the sale agreement and the escrow or trustee account details before it releases the transfer, and will apply tax collected at source on remittances above a threshold, at a rate that the Union Budget has changed more than once. The TCS is creditable against your Indian tax liability, but it is cash you need at the time of transfer. Confirm the current threshold, rate and paperwork with your bank before the dates in a payment plan are agreed.
Non-resident Indians: NRE and NRO accounts
An NRI is not bound by the LRS and can fund a Dubai purchase from an NRE account, which holds foreign earnings and is freely repatriable, or from an NRO account, which holds Indian-source income and has repatriation limits and tax attached. Which account you use affects what can be brought back to India later and how it is taxed there; it is worth deciding at the outset with your adviser rather than at the point of sale.
The money can leave India in a week. Decide how it comes back before it goes.
Currency
Every Dubai payment is made in UAE dirhams, which have been pegged to the US dollar at AED 3.6725 since 1997. The rupee is not pegged, and over the last two decades it has weakened against the dollar more often than it has strengthened. For an Indian buyer that has two consequences: the price in rupee terms moves between reservation and each instalment, and rental income or a sale proceeds converted back into rupees carries the same exposure in the other direction. Many of our Indian clients regard holding a dollar-linked asset as part of the point. It is worth deciding, deliberately, that you do too.
Transfers
International transfers into a developer's escrow account or a trustee's account take two to five working days and are routinely queried for source-of-funds documentation by the receiving bank — the second most common reason a remote purchase stalls. Send the documentation that explains the money with the transfer, not after the bank asks: the LRS declaration and Form A2, the sale agreement, salary or business evidence. For the balance on a ready purchase, the trustee office needs certain funds on the day, which for a buyer without a UAE account usually means a transfer to the trustee in advance.
A useful habit is to make the first, small transfer — the booking deposit — well before any deadline, so that the receiving bank runs its checks on a payment that is not time-critical. Once the account and the file are known to both banks, later instalments tend to clear without questions.
What you must report at home
A resident of India who owns property abroad currently reports it in the foreign assets schedule of their Indian tax return, declares rental income in India, and is taxed there on it, with credit for any UAE tax (of which there is currently none on residential rent) under the India–UAE double taxation agreement. Gains on a sale are also an Indian tax question for a resident. An NRI's position is different and depends on residence status. We are not tax advisers, we do not give tax advice, and we will happily speak to yours.
Practical sequence
- Before you shortlist: confirm your LRS headroom for the year, or your NRE/NRO position, and the current TCS rules with your bank.
- Before you reserve: assemble the source-of-funds file — statements, salary or business evidence, the LRS declaration — so it travels with the first transfer.
- On an off-plan plan: map the instalment dates against Indian financial years and each co-owner's allowance.
- After purchase: diarise the Indian reporting for the property and any rent, and register a UAE will covering the asset through the DIFC Wills Service or Dubai Courts.
None of this is difficult, and all of it is easier before the first instalment date is fixed. The buyers who find the process smooth are the ones whose bank, accountant and advisor have all seen the same payment schedule. The ones who find it stressful are usually discovering a tax-collected-at-source charge or an exhausted allowance at the moment a developer is waiting for money.