Buying off-plan property in Dubai from India: LRS, tax and the process (2026)

Indian buyers are among the largest groups of foreign buyers in Dubai, and the purchase itself is the same for them as for anyone else: you reserve a unit, sign a sale and purchase agreement with the developer, the developer registers the sale on the Dubai Land Department's Oqood register, and you pay instalments into the project's escrow account. Our step-by-step guide covers that side in full.

What is different for an Indian buyer is everything that happens before the money leaves India and after the property starts earning. That side is governed by Indian law: the Foreign Exchange Management Act (FEMA), the Reserve Bank of India's Liberalised Remittance Scheme (LRS) and the Income-tax Act. This guide covers those rules as they stand on 2 October 2026.

This is general information, not tax or legal advice. FEMA and tax rules depend on your residential status and circumstances, and they change in most budgets. Before you remit, speak to a chartered accountant in India and to the foreign exchange desk of the bank you will remit through.

Conversions in this guide are approximate, at about INR 96.3 per US dollar and INR 26.2 per dirham at the start of October 2026. The dirham is pegged at AED 3.6725 to the dollar, so the rupee figures move with the rupee–dollar rate.

The first question is not where you live but how Indian law classifies you, and FEMA and the Income-tax Act use different tests.

• Resident individual. Under FEMA, broadly someone living in India who has not left to take up work or to stay abroad indefinitely. A resident buys foreign property only through the routes FEMA allows, in practice the LRS. Under the Income-tax Act a resident, as opposed to a resident but not ordinarily resident, is taxed on worldwide income.
• Non-resident Indian (NRI). The RBI defines an NRI as a person resident outside India who is a citizen of India. FEMA does not restrict what a person resident outside India owns abroad, so an NRI living in Dubai, the UK or the US buys with money earned abroad without LRS limits. For tax, a non-resident is generally taxed in India only on income that arises or is received in India.
• OCI cardholder. An Overseas Citizen of India living abroad is a person of Indian origin resident outside India and is in the same position as an NRI for this purpose. An OCI cardholder who lives in India is a resident under FEMA, but rule 21 of the Overseas Investment Rules does not restrict property held by a resident who is a foreign national, so the position needs specific advice.

Status can change mid-purchase. An off-plan plan runs for three or four years, and someone who buys as an NRI in Dubai and moves back to India before handover is a resident when the later instalments fall due. Property acquired while non-resident can be kept after returning under section 6(4) of FEMA, but the remaining payments would then need a permitted route. Plan for it before you book.

A person resident in India cannot acquire immovable property abroad without permission from the RBI. The permission comes from rule 21 of the Foreign Exchange Management (Overseas Investment) Rules, 2022, which lists the routes. For a resident buying a new property in Dubai, the relevant ones are:

• Under the LRS, with remittances that relatives resident in India can combine;
• Jointly with a relative who is resident outside India, for example a sibling working in the Gulf;
• Out of a Resident Foreign Currency (RFC) account, for those who have returned from abroad with foreign savings;
• Out of income or sale proceeds of assets held abroad that were acquired lawfully.

The RBI's LRS Master Direction lists the acquisition of immovable property outside India among the permitted capital account transactions, in accordance with the Overseas Investment Rules. Residential and commercial property both qualify. The scheme has existed since 2004 and the limit has been USD 250,000 since 2015.

The rules that matter for a property buyer:

1. USD 250,000 per person per financial year. The financial year runs from April to March, and every resident individual, including a minor, has a separate limit. It is a single limit for all LRS purposes, so travel, gifts, a child's fees abroad and foreign shares in the same year reduce what is left for property.
2. Relatives can combine. The RBI's LRS FAQ says remittances to buy property abroad may be consolidated in respect of relatives, provided each relative is resident in India and meets the scheme's conditions. Relative means relative as defined in the Companies Act, 2013, which includes a spouse, parents, children and siblings. For other investments, clubbing is allowed only for co-owners, so in practice families usually buy jointly in the names of those who remit.
3. No borrowing from Indian banks. The Master Direction says banks should not extend any kind of credit facility to resident individuals to facilitate capital account remittances. You cannot take a personal loan or a loan against Indian property from an Indian bank and send it under the LRS for a Dubai flat. Your bank will ask for a year of bank statements to satisfy itself on the source of funds.
4. One designated bank. You nominate a branch of an authorised dealer bank through which all your LRS capital remittances are made. A new customer faces extra due diligence, so it helps to remit through a bank you have banked with for at least a year.
5. PAN is mandatory. No PAN, no LRS remittance.

This is where off-plan suits Indian buyers better than ready property. A ready property is paid for in one transfer at the trustee office, so its whole price has to fit within one year's limits. An off-plan purchase is paid in instalments over the construction period, typically three to four years, so each financial year needs to absorb only the instalments that fall in it. Our guide to off-plan payment plans explains the structures, and the payment plan calculator shows when each payment falls.

A worked example. Take a AED 1.5M apartment, about USD 408,000 or Rs 3.9 crore, on a 60/40 plan, booked in November 2026, with handover expected in 2029.

Each year stays below USD 250,000 for a single buyer. The same unit as a ready property would need about USD 426,000 in one year, which only two or more family members remitting together could manage.

Three cautions on the example:

• Your other LRS spending counts. A family holiday or a child's university fees in the same year come out of the same USD 250,000.
• Milestone instalments can bunch. If instalments are tied to construction milestones, a fast build can bring two payments into one financial year. Check the schedule before you sign and leave headroom.
• The handover payment is the large one. On a 60/40 or 50/50 plan the final payment can be 40% to 50% of the price in a single year. A UAE mortgage at handover is the usual answer for UAE-resident buyers, but whether a resident Indian can take and service a UAE mortgage raises its own FEMA questions, so get advice first. Our off-plan mortgage guide covers the UAE lending side.

Post-handover plans, where part of the price is paid in instalments after you receive the keys, spread the money further and are worth looking at if the limit is tight.

Tax collected at source (TCS) is collected by your bank when you remit and paid to the government against your PAN. For property purchases it is significant in cash terms, so it belongs in the budget from day one.

Until 31 March 2026 the rule sat in section 206C(1G) of the Income-tax Act, 1961. The Finance Act, 2025 raised the threshold from Rs 7 lakh to Rs 10 lakh from 1 April 2025. From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act, and TCS on LRS remittances now sits in section 394, with the same Rs 10 lakh threshold and the 20% rate for other purposes. The rate for education and medical remittances was cut to 2%; that does not apply to property.

On the first year of the worked example, about USD 99,000 or Rs 95 lakh, the bank would collect about Rs 17 lakh in TCS: 20% of the Rs 85 lakh above the threshold. Two points make this manageable:

• It is credited, not lost. TCS appears in your tax credit statement (Form 26AS or its successor) and is set against your income tax for the year. If it exceeds your liability, the excess is refunded after you file your return. Salaried buyers can ask their employer to take TCS into account when deducting tax at source, which shortens the wait.
• It is a cash-flow cost. Until the refund arrives the money is out of your account, so the TCS needs to be funded alongside the instalment. Splitting remittances among family members who each have their own Rs 10 lakh threshold reduces the amount collected, but only where each of them is a genuine co-buyer using their own money.

Ask your bank how it tracks the Rs 10 lakh threshold. It is meant to apply per person per financial year; if you remit through more than one bank, check how each bank counts it.

Each remittance is made on Form A2, the RBI's application and declaration for outward remittances, in which you declare the purpose and confirm that the remittance, together with your others in the year, is within the LRS limit. Banks now usually take it online.

• Purpose code: S0005, "Indian investment abroad in real estate", from the RBI's list of purpose codes.
• Beneficiary: the project's escrow account, exactly as it appears on the developer's payment request and on the Dubai Land Department's project record. Our step-by-step guide explains how to check it on the Dubai REST app.
• Supporting documents: banks usually ask for the reservation form or SPA, the developer's payment request or invoice, and the year's LRS declaration. Some ask for the Oqood certificate once it is issued.
• Records: keep every Form A2, bank advice, TCS certificate and developer receipt. You will need them for your tax return, for Schedule FA and, years later, for computing the cost of the property when you sell.

A resident is taxed in India on worldwide income. Owning a Dubai property creates three Indian tax points.

Rent. Rent from the Dubai property is taxed as income from house property, converted into rupees, and added to your income at your slab rate. The usual standard deduction for let property applies to the net annual value. Which Dubai costs, such as service charges, can be deducted is a question for your chartered accountant.

Capital gains on sale. A gain on selling the property is taxable in India. Immovable property held for more than 24 months is a long-term capital asset, and since the Finance (No. 2) Act, 2024 long-term gains on property bought after 23 July 2024 are taxed at 12.5% without indexation, plus surcharge and cess. A gain within 24 months is short-term and taxed at your slab rate. The Income-tax Act, 2025 carries these rules forward under new section numbers. When the holding period starts for an off-plan unit, at booking, at the SPA or at handover, is a point to settle with your adviser, as is whether reinvestment reliefs apply: the residential house relief, for example, has required the new house to be in India.

Selling before handover. An assignment of an off-plan unit before completion, which our guide to selling off-plan before handover describes, is a transfer of rights under the contract and is also taxable in India.

The India–UAE tax treaty

India and the UAE have a comprehensive double taxation avoidance agreement. Article 6 allows income from immovable property to be taxed in the country where the property is, and Article 13 does the same for gains on selling it. India, as the country of residence, gives credit for tax paid in the UAE.

In practice that credit is nil, because the UAE does not levy income tax on individuals, and UAE corporate tax does not apply to an individual's real estate investment income that is not earned through a licensed business. The treaty therefore does not reduce Indian tax on Dubai rent or gains for a resident. Its main use is for people whose residence is genuinely in question, where its tie-breaker rules apply.

Schedule FA and the Black Money Act

A resident must report foreign assets in Schedule FA of the income tax return, and a Dubai property is a foreign asset from the moment you hold rights in it, which for off-plan is from the booking or Oqood registration, not only from handover. Report it every year you hold it, even if it earns nothing and even if your income is below the taxable limit; holding a foreign asset itself requires a return. ITR forms have asked for foreign assets held during the calendar year ending 31 December; check the form for your year.

The penalties are severe. Under sections 42 and 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, failing to file a return or omitting a foreign asset can cost Rs 10 lakh per year. The Finance (No. 2) Act, 2024 relieved assets worth up to Rs 20 lakh from that penalty, but the relief expressly excludes immovable property. A Dubai flat must always be disclosed. An asset bought from undisclosed income is in a different category altogether, with tax and penalties on its value, which is one more reason to pay only from documented funds through the LRS.

The RBI's LRS FAQ says that a person who remitted under the scheme can retain and reinvest the income earned on investments made under it. It then adds that foreign exchange received, realised, unspent or unused, unless reinvested, must be repatriated and surrendered to an authorised bank within 180 days, and that any additional repatriation requirement under the Overseas Investment Rules must also be followed.

How that applies to a Dubai property depends on the facts: whether rent is collected into a UAE bank account, whether it is used for service charges and other costs of the property, and what you do with sale proceeds. Practitioner commentary generally reads the rules as not compelling repatriation of the proceeds of a property bought under the LRS, but we have not found an official statement that settles it for every case. Agree the approach with your bank and chartered accountant before handover, and keep records of where the money goes. Whatever FEMA requires, rent and gains are taxable in India in the year they arise for a resident, whether or not the money is brought back.

For a non-resident, most of this guide falls away.

• Paying from abroad. Salary or business income earned in the UAE or elsewhere can be paid directly to the developer's escrow account. No Indian approval is needed for a person resident outside India to buy property abroad.
• NRE and FCNR accounts. Balances are freely repatriable and can be sent abroad for the purchase.
• NRO account. NRO balances, which hold Indian income such as rent or pension, can be remitted up to USD 1 million per financial year together with the sale proceeds of other Indian assets, subject to tax and the bank's certification forms.
• Indian tax. A non-resident is generally taxed in India only on income arising or received in India, so Dubai rent and gains are usually outside Indian tax. Note that an Indian citizen with Indian income above Rs 15 lakh who is not liable to tax in any other country can be treated as resident under the deemed residency rule. UAE-based NRIs with significant Indian income should check this with their adviser.
• Returning to India. Under section 6(4) of FEMA, property acquired while resident outside India can be kept, sold and reinvested after you return. Once you are resident for tax purposes, the Dubai rent and gains become taxable in India and Schedule FA applies, with a transition period if you qualify as resident but not ordinarily resident.

Once the money question is solved, an Indian passport holder buys in Dubai exactly as any foreign buyer does. Non-UAE nationals can own freehold in designated areas under Law No. 7 of 2006, and you do not need UAE residency. Our guide to whether foreigners can buy property in the UAE covers ownership across the emirates.

The steps, from checking a project on Dubai REST to the title deed, are in our guide to buying off-plan step by step. In brief: you reserve with a booking deposit, sign the SPA, often electronically, the developer registers the sale on Oqood and the 4% DLD fee is paid, and you pay instalments into the escrow account during construction.

Documents for Indian buyers

• Passport, valid for the period of the transaction. DLD's initial sale registration takes a copy of the buyer's Emirates ID or, for a non-resident, passport.
• Proof of address, such as an Aadhaar card, utility bill or bank statement, for the developer's anti-money laundering checks.
• Source of funds, which for a resident Indian is usually the bank remittance advice and statements showing the LRS transfer. Paying from your own account in your own name makes this easy.
• PAN, which the Indian bank needs, not the Dubai developer.

Power of attorney signed in India

Most off-plan purchases need no power of attorney: the SPA is signed electronically and the developer registers Oqood. A power of attorney becomes useful at handover, for an assignment at a trustee office, or for later sale and leasing.

India is a party to the Hague Apostille Convention, but the UAE is not, so an apostille alone is not accepted in Dubai. The Ministry of External Affairs offers normal attestation for countries that do not accept the apostille. The usual chain is: sign before a notary, have the document authenticated by the state government's designated authority, attest it at the MEA, legalise it at the UAE Embassy in New Delhi or a UAE Consulate, then have it attested by the UAE Ministry of Foreign Affairs and translated into Arabic by a legal translator in the UAE. Make it specific to the property and the acts you are authorising; Dubai trustee offices and developers can refuse general or unclear wording. Signing a power of attorney in Dubai before a notary on a visit is often simpler.

Golden Visa

A property worth AED 2M or more can support a ten-year UAE Golden Visa, and an off-plan Oqood registration is accepted in place of a title deed. A UAE Golden Visa does not change your Indian status: an Indian resident who holds one remains taxable in India on worldwide income until the day-count rules make them non-resident. The detail is in our Golden Visa guide.

The Dubai costs are the same for every buyer: the 4% DLD fee, developer administration, and later service charges and utilities. Our guide to the true cost of buying off-plan in Dubai breaks them down. An Indian buyer adds the India-side costs.

Exchange rates matter more than most buyers expect. A purchase priced in dirhams and paid over four years is a four-year exposure to the rupee–dollar rate, and the rupee has weakened against the dollar over the past year. Budget instalments at a conservative rate.

1. Am I resident or non-resident under FEMA and under the Income-tax Act this year, and will that change before handover?
2. How much of my USD 250,000 LRS limit is left this financial year, after travel, education and other remittances?
3. Does the payment plan keep each financial year's instalments inside my limit, or inside the combined limits of the relatives buying with me?
4. Is every rupee from my own documented funds, with no Indian bank loan involved?
5. Have I budgeted the TCS as cash, and do I know when it will come back?
6. Will the escrow account details on the developer's payment request match the project record on Dubai REST?
7. How will I fund the handover payment, which may be 40% to 50% of the price in one year?
8. Has a chartered accountant confirmed how rent, gains, Schedule FA and any repatriation will be handled?

Browse current off-plan projects with these answers in hand, and use the payment plan calculator to map instalments against financial years. If you would like help shortlisting projects whose plans fit the LRS, contact us. None of this is personal financial, tax or legal advice; for decisions specific to you, take advice from a chartered accountant in India and an independent lawyer.