LRS and FEMA Explained: Sending Money from India to Buy Dubai Property

The One Mechanism That Makes It Legal

There is exactly one ordinary route by which a resident Indian legally sends money abroad to buy property, and it is the Reserve Bank's Liberalised Remittance Scheme. Every compliant Dubai purchase by a resident runs through it.

The scheme permits a resident individual to remit up to USD 250,000 in a financial year, running April to March, for a defined set of permitted current and capital account transactions. Acquiring immovable property outside India is one of the permitted capital account transactions, which is what makes buying a Dubai apartment lawful rather than a grey area.

It applies to individuals, including minors. It is also available without prior Reserve Bank approval, which is the point of the word liberalised. You do not apply for permission. You remit through your bank, within the limit, with the correct declaration.

What trips buyers up is not the existence of the scheme. It is the practical detail: what else counts against the limit, how the timing works across financial years, and what the bank needs from you.

What the Limit Actually Covers

The most commonly missed point is that the USD 250,000 is not a property allowance. It is a total annual allowance covering nearly everything you send abroad.

Overseas travel spending, education fees for a child studying abroad, medical treatment, gifts to relatives outside India, investments in foreign shares or funds, and property purchases all draw on the same annual limit. That catches families out. One already funding university fees abroad may have far less headroom for a property remittance than they assume.

So the first exercise is an audit, not a calculation. Establish what you and each intended co-owner have already used this financial year. Only then decide what the purchase schedule can look like.

The limit is per individual, not per family or per household, and it resets on 1 April. That reset is the single most useful feature for property buyers, because it converts a hard ceiling into a multi-year budget, which is exactly how off-plan payment plans are structured. We work that through in our guide to funding across multiple LRS years.

How a Remittance Actually Happens

The mechanics are handled by your bank, acting as an authorised dealer, and they are more routine than buyers expect.

You approach the bank with the remittance request, complete the prescribed declaration confirming the purpose and that the remittance is within your annual limit, and provide the supporting documentation for the transaction. For a property purchase that typically means the sale and purchase agreement or the developer's demand notice, evidence of the beneficiary account, and identification and tax details.

The purpose is recorded against the appropriate purpose code for overseas property acquisition, which matters because it is how the transaction is categorised in the reporting the bank makes. Getting the purpose right is part of the compliance, not a formality.

Tax is collected at source on remittances above the annual threshold in this category. That collection is a prepayment creditable against your income tax liability rather than an additional tax, though it does affect cash flow at the moment of remittance. Our guide to TCS on foreign remittance explains why it is not the 20 percent loss it is often described as.

The Source of Funds Question

The scheme governs how money travels. It says nothing about whether the money was legitimate to begin with, and that distinction is where most enforcement problems originate.

Funds remitted must come from your own legitimate, tax-paid resources. Money never declared in India does not become clean by passing through a compliant channel. The transfer is correct. The source is not, and the source is what an investigation looks at.

That also means remitting on behalf of someone else, or receiving funds from a third party to remit under your own limit, creates exposure. The person remitting should be the person whose money it is and, where a property is jointly funded, the ownership should reflect the funding.

Indian press has reported enforcement notices concerning Dubai property funded through irregular routes, including property-related payments made on credit cards and remittances inconsistent with declared income. Our guide to FEMA compliance sets out the patterns that draw attention. General guidance only. Because remittance limits and tax rates are revised regularly and residency changes the answer entirely, confirm your specific case with a qualified professional.

Using the Scheme Well

Handled deliberately, the scheme is an enabler rather than a constraint, and a few habits make it work smoothly.

Audit your remaining headroom before committing to a payment schedule, for yourself and any co-owner. Choose a payment plan whose annual cash requirement fits within the limits available to you, rather than assuming you will find a way later. Remit from your own account, in your own name, from declared income, with the purpose correctly recorded.

Keep every remittance advice and declaration in a single file alongside the purchase documents, because those advices are what reconcile your Schedule FA disclosure to your actual investment. And tell your chartered accountant before the first remittance rather than at filing time.

The limit has been unchanged at USD 250,000 for some years, but it is a recurring Budget speculation item, as is the tax collected at source. Confirm the live position before planning a multi-year purchase around it. Our Dubai project pages set out the payment plans that determine how many years the funding needs to span. None of this is financial or tax advice. The rules described are current as at FY 2026-27, change frequently, and apply differently depending on residential status, so take professional guidance first.

Where Remittances Actually Go Wrong

The scheme itself is straightforward. The problems arise in execution, and they are consistent enough to list.

Purpose coding. Every outward remittance carries a purpose code, and it needs to match what the money is actually for. A payment coded incorrectly creates a mismatch between your declared purpose and the asset you end up owning, which surfaces years later when you try to repatriate proceeds and the chain does not reconcile.

Documentation gaps across years. An off-plan purchase may involve a dozen remittances across four financial years. The advice for each is what a bank will ask for at the end. Owners routinely have the first and last and not the ones in between.

Ownership that does not match funding. Where family members pool their individual limits, the title must reflect who actually paid. A property funded by three people and registered to one creates problems for repatriation and for tax simultaneously.

Assuming the limit resets on a calendar year. It runs on the Indian financial year, and a purchase planned around the wrong year end can leave you short.

And treating the limit as the budget. The limit governs what you can send, not what the purchase costs. Fees, transfer charges and TCS all consume capacity that buyers frequently forget to reserve.

Family Limits and the Co-Ownership Condition

Because the annual limit is per individual, a widely repeated shortcut circulates in this market: pool the family's limits and remit a multiple of USD 250,000 for a single property. The idea is broadly right and the usual framing of it is wrong in an important respect.

The Reserve Bank's own guidance is narrower than the marketing version. Clubbing of remittances by family members for capital account transactions is not permitted where those family members are not co-owners of the asset being acquired. In other words, several people may each remit toward one property, but they should be co-owners of it, not merely relatives funding a purchase in someone else's sole name.

That condition is frequently dropped in commercial content, which tells buyers a family of four can freely combine limits without mentioning that the ownership structure has to match the funding structure. If the title deed names one person while four people funded it, the arrangement does not sit comfortably within the guidance.

So decide the ownership structure before the money moves, not after. If the plan is for spouses to combine limits, the property should be in joint names. This is precisely the point to run past a chartered accountant, because the structure affects both the remittance position and the later disclosure and capital gains treatment. This is general guidance for Indian buyers rather than personal advice. Rates, limits and disclosure rules change at each Budget, so confirm the current position and your own status with a qualified professional.

Keep the Paper From Day One

One habit prevents most of the trouble described above. Open a single file, digital, at the first remittance.

Into it goes every A2 form and outward remittance advice with its purpose code, every instalment receipt, the booking and sale agreement, the registration documents, and each year's Schedule FA disclosure. Add the rent receipts and service charge invoices once the property completes.

This is unglamorous and it takes minutes each time. Years later it is the difference between a repatriation that takes days and one that takes months, because a bank reconciling money out against money in will ask for precisely these documents and will not accept recollection instead.

Assume you will be asked to evidence a payment made four years earlier. Keep the file accordingly.