Indian nationals eyeing property investments in Dubai are being urged to avoid using international credit cards (ICCs) for down payments, amid growing concern over legal and financial violations stemming from such transactions. Experts in real estate, tax, and foreign exchange regulation are sounding the alarm: what seems like a convenient option may in fact contravene Indian law, specifically the Foreign Exchange Management Act (Fema).

"Using an international credit card to pay for real estate abroad bypasses the Reserve Bank of India’s approved framework," said Anurag Chaturvedi, CEO of Andersen UAE. "It’s like trying to pay for a house with a travel wallet - it’s not permitted, and it could get you into serious trouble."

Under Indian law, real estate transactions abroad fall under capital account transactions, which must adhere to the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). The scheme allows Indian residents to remit up to $250,000 per financial year through authorised banks, provided all documentation and regulatory compliance measures are in place.

International credit cards, on the other hand, are explicitly restricted to current account transactions - such as travel, education, and consumer spending. When misused for capital investments like property, they may trigger scrutiny from regulatory bodies including the RBI, the Income Tax Department, and the Enforcement Directorate. The risks are not merely regulatory: high interest rates, foreign exchange mark-ups, and late fees add significant financial exposure.

"These risks are not only regulatory but also economic," Chaturvedi said. "Making such payments with ICCs is financially unsound and legally risky."

Some developers in Dubai allow a nominal portion of the down payment - typically below Dh80,000 - to be reserved, giving buyers more time to comply with cross-border payment protocols. But financial experts warn that even partial payments via ICCs can expose Indian investors to investigations and penalties.

Gauraw Keswani, CEO of JSB Incorporation, urged Indian buyers to align all transactions with the LRS framework. “The use of international credit cards for such transactions, while seemingly convenient, does not align with Fema and LRS norms,” he said. “Developers and agents must also promote transparent and compliant practices.”

The call for caution comes as a growing number of Indian investors look to Dubai's dynamic property market, drawn by competitive pricing, high yields, and investor-friendly policies. But the convenience of plastic should not come at the cost of legal compliance.

For Indian investors, the message is unequivocal: consult with financial advisors, use authorised banking channels, and document every transaction. The risks of non-compliance are simply too high.

Photo credits: Dubai Instagram 

Oksana Bozhko

Oksana Bozhko is a Contributor to Dubai Voice.