Why credit card payments turn risky for Indian property buyers in UAE

Dubai: A tempting property deal in Dubai—1% or 2% down payment, flexible instalments, glossy brochures—and many visiting Indian buyers instinctively reach for their international credit cards. But that simple swipe could trigger a world of regulatory headaches and financial risks.

For everyday spending—shopping, hotel stays, or even school fees—international credit cards are perfectly fine. The problem arises when buyers attempt to use them for capital account transactions, like booking property overseas.

Under Indian law, that kind of payment doesn’t qualify as a routine expense. Instead, it falls under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), which specifically governs how Indian residents can move money abroad for investments, including real estate.

International credit cards are designed for current account transactions such as retail purchases, travel, or medical expenses. Property, however, is treated differently: it is considered a capital investment.

Paying through a card effectively bypasses the RBI’s compliance trail, which includes authorised dealer banks, Form A2 declarations, and Tax Collected at Source (TCS).

The transaction might technically go through at the developer’s end, but for Indian buyers it’s not “clean.” Regulators can later raise questions, and saying “the card worked at the time” won’t hold up. In fact, such payments can be flagged as violations under the Foreign Exchange Management Act (FEMA).

Indian authorities have stepped up scrutiny of overseas investments. Credit card-based payments for Dubai property have already led to complaints, bans, and legal notices in multiple countries.

For resident Indians, the annual remittance cap under the LRS is $250,000 per financial year, and the remitting account must be at least one year old. Every property purchase abroad must also be declared in Indian tax filings.

Ignoring these requirements could complicate resale, repatriation of funds, or even expose buyers to investigations by the RBI, Income Tax Department, or Enforcement Directorate. Beyond compliance, credit card payments bring high interest rates, forex mark-ups, and late fee risks—making them financially unsound as well.

For Indian residents, the only legally recognised route is to transfer funds via a registered Indian bank under the LRS framework.

That means submitting the required Form A2, PAN details, and ensuring the transfer is made directly from the Indian bank to the UAE developer’s account. A 20% TCS applies upfront, but this is creditable when filing taxes.

Yes, the paperwork may feel heavy, but it provides what every cross-border investor needs most: compliance, transparency, and the ability to repatriate funds smoothly later.

Developers in Dubai may still tempt buyers with ultra-low down payments, but for Indian residents, using a credit card is a risky shortcut.

Proper channels under RBI’s Liberalised Remittance Scheme not only protect buyers legally but also ensure that their overseas property is a clean, reportable asset.

In short: a swipe may feel convenient in the moment, but when it comes to Indian buyers investing in Dubai real estate, compliance beats convenience every time.