ED Notices Indians Over Dubai Property Credit Buys

The Enforcement Directorate (ED) has issued notices to several Indian individuals who allegedly used international credit cards to purchase properties in Dubai, raising concerns over violations of foreign exchange rules.

According to sources, at least three individuals received notices in February. The agency has questioned the source of funds used in these transactions, as Indian regulations restrict borrowing for purchasing property abroad.

Reports suggest that buyers either swiped their international credit cards while visiting the UAE to pay initial deposits or used online payment links provided by developers. However, such transactions are treated as short-term loans, which are not permitted for overseas property purchases under Indian law.

As per the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), individuals can invest in foreign properties only by transferring legally earned and tax-paid money through proper banking channels. Using borrowed funds, including credit cards, falls outside these guidelines.

Following the notices, affected individuals are now seeking to regularise their transactions. They may be required to correct the payment method and pay penalties. In some cases, they could also face losses if forced to sell properties in a weak market.

Experts say many buyers may have unknowingly violated rules. They advise approaching the RBI for compounding, a process where individuals admit the violation and settle it by paying a fine.

The regularisation process may involve sending fresh funds through banks and requesting developers to refund the credit card payments. In certain situations, authorities may even direct buyers to sell the property and bring the funds back to India.

Banking experts believe that authorities may take a lenient view in genuine cases, especially where funds are legitimate and no illegal channels like hawala were used.

The issue highlights the importance of understanding foreign exchange laws before making overseas investments, especially in real estate.