News: ED Notices on Dubai Property Bought on Credit Cards-23-03-2026
The Enforcement Directorate (ED) has flagged cases of Indians using credit cards to buy property abroad, especially in Dubai, raising questions about compliance with foreign exchange rules. The Economic Times reported on March 23 that the agency has served notices on at least three persons who used their cards to pay the initial deposit or clicked payment links sent by UAE developers.
Under India’s foreign exchange framework, overseas property can be bought only through authorised channels under the Liberalised Remittance Scheme (LRS), which currently lets individuals remit up to $250,000 per financial year for permitted purposes. Such transactions must go through authorised dealer banks with proper reporting and documentation.
Shikher Upadhyay, Senior Associate, Foresight Law Offices, said buying overseas real estate directly on a credit card can fall into a grey or non-compliant area. Cards are not meant to be a primary instrument for capital account transactions, he said, and LRS compliance calls for traceability, a purpose declaration and adherence to limits, which a card transaction may not adequately capture. Although recent clarifications have aligned certain card spends with LRS reporting, he added, using cards for high-value capital transactions could invite scrutiny under FEMA and RBI guidelines.
The episode also raises a personal finance question. Credit cards offer unsecured credit for a short period and are not a substitute for long-term borrowing such as a home loan. Within India, property is generally not bought on cards, since developers and sellers usually do not accept card payment for the full value because of high processing charges and transaction limits.
Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution, said that even where part payment is possible, it is usually not prudent because any unpaid balance attracts very high interest, and a home loan remains the more appropriate route for high-ticket purchases.
Upadhyay noted that even with EMI conversion, the effective cost, including processing fees and GST, is usually far higher than secured borrowing. Credit card EMIs often carry interest of 18-36 per cent per annum, plus fees and taxes, so buyers should assess the effective annualised cost and not just the EMI figure. Missing a single payment can trigger penal interest and late fees and hurt credit scores, he said.
Kapoor cautioned that routinely paying EMIs through cards can lead to a debt trap and affect the borrower’s credit profile, as repeated high utilisation may signal repayment stress to lenders.
The only narrow case for using a card is a small token or booking amount, provided it is repaid within the interest-free period without extra charges.
