Indian property buyers warned against using international credit cards
Real estate and tax experts have cautioned Indian residents against using international credit cards (ICCs) to make down payments on overseas property purchases, warning that such transactions carry both legal and financial risks.
According to experts, ICCs are permitted only for current account transactions such as travel, shopping, and education-related payments. However, property purchases abroad are categorised as capital account transactions under India’s Foreign Exchange Management Act (FEMA).
Anurag Chaturvedi, CEO of Andersen UAE, explained that using ICCs to pay for property abroad bypasses the Reserve Bank of India’s (RBI) approved framework — the Liberalised Remittance Scheme (LRS).
“The RBI has explicitly clarified that ICC usage for real estate, being a capital outflow, must follow LRS norms. Bypassing this process amounts to a violation of Fema,” Chaturvedi said.
The LRS allows Indian residents to remit up to $250,000 per financial year through authorised banks, ensuring compliance with tax and regulatory requirements. Payments under this scheme require proper documentation and an active bank account for at least one year.
Gaurav Keswani, CEO of JSB Incorporation, stressed that Indian investors should comply strictly with Fema and LRS regulations.
“The use of international credit cards for such transactions, while seemingly convenient, does not align with LRS norms. Remittances for overseas property must be made through authorised banks, with full compliance and documentation,” he noted.
Risks of using international credit cards
Experts warn that property payments made using ICCs can expose buyers to significant legal and financial consequences. These include:
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Breach of FEMA regulations and potential investigations by the RBI, Income Tax Department, or Enforcement Directorate (ED).
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High interest rates, foreign exchange mark-ups, late fees, and penalties.
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Financial imprudence, given the additional costs of using credit cards for high-value transactions.
“Buying property abroad with an international credit card is like trying to pay for a house with a travel wallet – it’s not permitted, and it could get you into serious trouble,” Chaturvedi cautioned.
Experts also advised developers and real estate agents to encourage transparent, compliant processes to safeguard investors and prevent regulatory violations.
