2024-04-30 05:04:51
New DelhiThese days, one thing is seen common in the real estate market of Delhi NCR, Mumbai, Bengaluru, Ahmedabad etc. Dubai Build is repeatedly organizing property fairs in these cities. In this fair, the builder or his broker shows beautiful dreams to the rich here. Let us tell them how easily you can buy property in Dubai. We also tell you what benefits you will get by investing there. Along with this, they also dream of gold visa. But in this tempting promise they do not even realize that they are also violating many rules of the Government of India.
The offer is tempting but…
According to a report in our colleague ET, resident Indians get many attractive offers in the Dubai Property Fair. For example, only 15 to 20% down-payment of the property price is required. Option to pay the remaining amount in installments over a period of 4 to 8 years. Falling into this beautiful trap, they are unaware that they are either violating Forex laws or falling into the gray area of the rule book.
What does the Government of India rule say?
The Indian Government’s rules for buying property abroad are very clear. Any resident Indian can send $2,50,000 to buy a house abroad. If all the family members together can deposit a large amount to acquire a large property. In such a situation, each member can send $2,50,000 (annual limit). But transactions involving paying in ‘installments’ over years to buy a ‘ready-to-move-in’ apartment or an under-construction property may come under question. Because there is an element of ‘leverage’ hidden in this deal, which is not approved by the rules of the Government of India.
Buying property in Dubai can be dangerous
Siddharth Banawat, partner, CA firm S Banawat & Associates LLP, says, “Advertisements for buying property in UAE can be a pitfall and some Indian individuals may fall prey to them and end up on the wrong side of the Foreign Exchange Management Act (FEMA). Under this Act, a resident Indian can enter into any financial transaction involving any asset outside India only with the general or specific permission of the Reserve Bank of India (RBI) on deferred payment basis. Purchase of real estate is not permitted, as it creates liabilities in foreign currency.”
Can you buy property abroad with borrowed money?
Mitil Choksi, senior partner at tax, advisory and forensic firm Choksi & Choksi, says a resident Indian cannot buy property abroad with borrowed money, whether the financier is a local bank or an offshore lender. In deals offering ‘installments’, where the property is acquired at the end of the payment period, there is a built-in lending arrangement. Financing outside India is not freely permitted for resident Indians and such installment plans, which conceal the amount of interest charged by developers, may be treated as financing and hence potentially non-compliant with FEMA. May go. However, a FEMA consultant (who declined to be named) said installments for projects under construction should not be a problem. But, buyers should check the contracts with the builders.
Indians are the biggest buyers of property in Dubai
According to a report released this year, Indians emerged as the largest property buyers in Dubai in the year 2023. British investors held this position for at least two quarters this year, which were overtaken by Indians. Indians are estimated to have invested around $2 billion in the UAE property market between 2020 and 2023.
Why does Dubai attract?
Property rates in many areas of the United Arab Emirates (UAE), especially in newly developed areas, are often cheaper than Mumbai. People living in big cities of India find it an attractive investment proposition.
golden visa also
In UAE you get the right to apply for a Golden Visa if you invest in property above a certain value. Recently the rules for Golden Visa have also been relaxed. This rule allows an applicant to borrow the entire amount for property acquisition. But experts say potential buyers should understand Indian forex rules first. Installment plans are limited to underlying financing plans and may be against FEMA.