Key Highlights

• Indian visitors can use credit cards in the UAE for personal spends, not for property down payments.
• UAE property investments by Indian residents must be routed via RBI’s Liberalized Remittance Scheme.
• Proper process requires Form A2, PAN, bank remittance, and applicable TCS; credit card swipes bypass compliance.
• Low off-plan down payments (often 5% or less) tempt buyers, but non-compliant payments can cause future regulatory issues.

Using credit cards for UAE property down payments can lead to serious compliance issues with Indian regulations, despite the convenience factor.

When Indian visitors arrive in the UAE, credit cards work seamlessly for shopping, dining, hotel stays, and other personal expenses. 

However, the same convenience becomes a regulatory trap when it comes to property investments, even for seemingly small down payments on off-plan projects.

The Credit Card Temptation

Dubai’s property market has become increasingly attractive to Indian investors, with developers offering enticing down payment schemes as low as 1%-2%. 

“Many off-plan deals in Dubai now have down payment requirements of 5% or even lower,” said a property broker. 

The ease of swiping a credit card to secure a property deal during a UAE visit might seem straightforward, but this approach bypasses critical Indian regulatory requirements.

“Credit cards are meant for personal spends, travel, shopping, any medical expenses – but not capital investments like property,” explains Gaurav Keswani, CEO of Dubai-based consultancy JSB Incorporation. “That falls under RBI’s ‘Liberalized Remittance Scheme’.”

The Compliance Gap

When Indian residents use credit cards for property down payments while overseas, they inadvertently skip the entire compliance framework mandated by the Reserve Bank of India (RBI). This means:

• No authorized dealer involvement
• No Form A2 submission
• No Tax Collected at Source (TCS) documentation

While the credit card payment may process successfully, it creates what Keswani describes as an “unclean” transaction trail. When regulatory authorities eventually review the investment, simply stating “the card worked” won’t satisfy compliance requirements.

The Proper Investment Route

Indian residents must follow the established Liberalized Remittance Scheme pathway for UAE property investments:

Bank Transfer Requirements:

• Use a remitting account that’s over a year old
• Submit Form A2 with PAN card details
• Transfer funds directly from the Indian bank account to the developer’s UAE account
• Accept the 20% TCS (recoverable during tax filing)

The annual remittance limit remains $250,000 for resident Indians under this scheme.

Rising Regulatory Scrutiny

Indian authorities have significantly tightened oversight of overseas investments by resident Indians. Enhanced digital tracking systems and improved cross-border data sharing means that compliance gaps that might have gone unnoticed previously are now more likely to be identified.

“Buyers from India would visit Dubai, fall in love with a project, and swipe their card to lock it in,” notes Keswani. “Awareness was low. Things are different now – India has sharper compliance, better digital tracking, and more cross-border data sharing. 

What felt harmless then could now trigger questions. That card swipe could cost you clarity, tax benefits, and clean exit options down the road.”

Additional Compliance Obligations

Beyond the initial investment process, Indian residents must declare the property in their Indian tax returns. “Ignore any of these, and you risk trouble later, especially during a resale or if the funds need to come back to India,” said Keswani.

Industry Awareness Efforts

Property brokers in the UAE report ongoing efforts to educate Indian clients about these compliance requirements. 

“I have repeatedly brought up RBI’s Liberalised Remittance Scheme compliance needs to get resident Indian buyers from using their credit cards,” said a property broker.

Despite repeated warnings, some visitors still attempt to use credit cards for property bookings, attracted by the low down payment requirements in Dubai’s off-plan market.

The Bottom Line

While the paperwork involved in proper compliance might seem burdensome, it establishes the foundation for smooth repatriation, clean ownership, and zero regulatory surprises.

As Keswani emphasizes, “The paperwork might feel heavy, but it sets you up for smooth repatriation, clean ownership, and zero surprises. You’re not just buying a property; you’re building a safe cross-border asset.”

For Indian residents considering UAE property investments, the message is clear: convenience today through credit card payments can create significant complications tomorrow. 

The proper compliance route, while requiring more initial effort, ensures a secure and legally sound investment structure that protects both the investment and the investor’s regulatory standing with Indian authorities.