Buying Dubai Property From India: LRS Limits, TCS, Tax and Reporting Rules for Resident Indians

A resident Indian can buy property in Dubai, but the money must go out under the RBI’s Liberalised Remittance Scheme, which allows USD 250,000 per person per financial year. Dubai will charge no tax on the rent or on a later sale. India will, for as long as you remain an Indian tax resident, and the property must be reported in your Indian return every year. This guide covers the rules in the order you meet them: sending the money, paying TCS, paying tax, and reporting.

If you are an NRI, most of this does not apply to you. See the section on NRIs below.

The rules at a glance

Stage	Rule	Key figure
Sending money	Liberalised Remittance Scheme (LRS)	USD 250,000 per person per financial year
At the bank	Tax Collected at Source (TCS)	20% on remittances above ₹10 lakh in a year
Each year you own it	Schedule FA in your income tax return	Mandatory, even with no income
Rental income	Taxable in India	Report in Schedule FSI
Sale	Capital gains taxable in India	Long term after 24 months
Bringing money back	Repatriate sale proceeds to India	Through normal banking channels

Sending the money: the LRS limit

Under the LRS, a resident individual can remit up to USD 250,000 in a financial year (April to March) for permitted purposes, including buying property abroad.

• The limit covers all purposes together. Money sent the same year for education, travel or overseas investments uses up the same USD 250,000.
• Family members can combine their limits if each one is a co-owner of the property. A couple can send USD 500,000 a year, and four family members USD 1 million.
• The money must be your own. You remit from your own bank account through an authorised dealer bank, using Form A2 and the purpose code for purchase of immovable property abroad.
• Spreading a purchase over two financial years is a common way to fund a larger property, since the limit resets on 1 April.

Be careful with off-plan payment plans. The LRS is designed for paying from your own funds, and FEMA rules restrict buying foreign property with borrowed money or on credit. Before committing to a multi-year developer plan, take advice from a FEMA specialist on how to structure the payments. Read the hidden truth about the LRS.

TCS: the 20% collected by your bank

When your LRS remittances in a financial year cross ₹10 lakh, the bank collects Tax Collected at Source at 20% on the amount above that threshold.

TCS is not an extra tax. It is an advance collection that you claim back as a credit against your income tax, or as a refund, when you file your return. But it is a real cash-flow cost. On a remittance of ₹1 crore, the bank collects about ₹18 lakh up front, and you may wait many months to recover it. Plan for it in your funding.

Tax in India while you own the property

If you are resident and ordinarily resident (ROR) in India, you are taxed on your worldwide income.

Rental income. Rent from the Dubai property is taxed in India under “income from house property” at your slab rate, after the standard 30% deduction. The UAE charges no tax on it, so there is no foreign tax credit to claim.

Sale. A gain on sale is a capital gain in India. It is long term if you held the property for more than 24 months, and short term, taxed at slab rates, if less. Check the current long-term rate and rules when you sell, because they were changed in 2024.

The treaty does not remove the Indian tax. The India-UAE tax treaty allows the country where the property is located to tax it, but it does not stop India taxing its own residents. Since the UAE levies nothing, the full Indian tax applies.

Use our India-UAE tax residency calculator to check your status.

Reporting: Schedule FA and Schedule FSI

Two schedules in the income tax return matter.

Schedule	What you report	When
Schedule FA (Foreign Assets)	The Dubai property itself: address, date and cost of purchase, and any income from it. Also your UAE bank account	Every year you hold it, even if it is empty and earns nothing
Schedule FSI (Foreign Source Income)	Rent or gains from the property	Any year it produces income

Points that catch people out:

• Schedule FA follows the calendar year, not the financial year.
• You must use ITR-2 or ITR-3. The simpler ITR-1 and ITR-4 cannot be used if you hold foreign assets.
• Joint owners each report their share.
• Non-disclosure is penalised under the Black Money Act, with a penalty of ₹10 lakh for failing to report a foreign asset, separate from any tax due. See how the Black Money Act applies to assets in Dubai.

Your UAE bank also reports your account to India automatically under the Common Reporting Standard, so an undeclared property that produces rent is unlikely to stay unnoticed.

The USD 1 million rule is a different rule

People often confuse two limits.

	LRS limit	USD 1 million facility
Who it is for	Resident Indians	NRIs, PIOs and foreign nationals
Direction	Money going out of India for permitted purposes	Repatriating money from India, such as NRO balances, inheritance or sale of Indian property
Limit	USD 250,000 per financial year	USD 1 million per financial year
Paperwork	Form A2	Form 15CA and 15CB

A resident Indian cannot use the USD 1 million facility to buy a Dubai property. An NRI selling a flat in India to fund a purchase in Dubai can. Amounts above USD 1 million need prior RBI approval through your bank.

If you are an NRI

Once you are a non-resident under the Income Tax Act, India taxes only your Indian income. Rent and gains from your Dubai property are outside Indian tax, there is no Schedule FA to file, and the LRS does not apply to money you earn and hold abroad. Your status depends on days spent in India, so check it each year. See NRI tax rules for Indians in Dubai and RNOR status if you are returning to India.

A compliance checklist

1. Confirm your residential status for the year.
2. Check how much of your LRS limit you have already used.
3. Decide who will own the property, and have each co-owner remit their own share.
4. Remit through your bank with Form A2, and keep the TCS certificate.
5. Keep the sale agreement, payment receipts and the title deed.
6. Report the property in Schedule FA every year.
7. Report rent and gains in Schedule FSI and pay Indian tax on them.
8. Claim the TCS as a credit in your return.

Frequently Asked Questions

How much money can an Indian send to buy property in Dubai?

USD 250,000 per person per financial year under the LRS. Family members who are co-owners can each use their own limit.

Is TCS on a Dubai property purchase refundable?

Yes. The 20% TCS is adjusted against your income tax for the year, and any excess is refunded when you file your return.

Do I pay tax in India on rent from my Dubai flat?

If you are resident and ordinarily resident in India, yes. It is taxed at your slab rate after a 30% standard deduction. NRIs do not pay Indian tax on it.

Do I have to report Dubai property in my Indian tax return?

Yes, in Schedule FA, every year you hold it as a resident and ordinarily resident taxpayer, even if it earns no income.

Can I take a loan in India to buy property in Dubai?

The LRS is meant for remitting your own funds, and FEMA restricts using borrowed money to acquire property abroad. Take specialist advice before borrowing for this purpose.

Can I buy Dubai property on a developer payment plan from India?

Instalments can be remitted within your yearly LRS limit, but deferred-payment structures raise FEMA questions. Get advice before signing.

This article is general information, not tax or legal advice. Indian tax and FEMA rules change frequently, so confirm the current position with a chartered accountant before you remit.