Many Indians who bought property in Dubai made their initial payment by either swiping their international credit cards while visiting the UAE or by clicking online payment links sent by builders or agents. At least three people have received ED notices in February, according to the Economic Times.
Credit cards, essentially a form of borrowing from banks, are not permitted for overseas property purchases under Indian law.
Officials say that when buyers swipe their credit cards for down payments on properties in Dubai, they are relying on borrowed funds, which is not permitted under the FEMA.
If you want to buy property outside India, you must send money legally through banks under the Liberalised Remittance Scheme (LRS), and strictly using your own money.
Credit cards are allowed only for routine personal expenses such as travel, hotel bookings, or shopping, and not for capital account transactions like property investments.
What’s not allowed via your credit cards?
Gambling and betting- Transactions linked to online betting, casinos, lottery ticket purchases or gaming platforms are often blocked by banks. They are treated as high-risk transactions.
Down payment for big purchases- Using a credit card for large payments like property booking amounts, particularly overseas, can violate rules. Indians cannot use borrowed funds to buy assets abroad as this can lead to fines and penalties.
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Sending money abroad- You generally cannot use a credit card to transfer money abroad. Transfers must go through banks under LRS.
Gold and jewellery purchases- While small purchases may go through, bulk buying or high-value transactions in gold or jewellery can be flagged by banks due to money laundering risks.
Stock market investments- Buying stocks, especially overseas equities, using credit cards is not allowed. Investments must be made using own funds through proper channels like LRS.
Adding money in wallets- Adding large amounts of money to digital wallets (like Paytm) using a credit card is often restricted.
