Remitting funds under the Liberalised Remittance Scheme (LRS)
The Reserve Bank of India allows every resident individual to remit up to USD 250,000 per financial year abroad for any permissible current or capital account transaction, including buying property. For a Modon apartment priced around ₹3.7 crore, a single year's LRS allowance is usually enough; larger villas may need two remittances across two financial years, or a joint application with a spouse.
- File Form A2 and a FEMA declaration with your bank each time you remit.
- Your bank converts INR to AED and wires directly to the developer's escrow account.
- Keep the developer's proforma invoice and allotment letter, the bank asks for them.
The 20% TCS and how to claim it back
Since 1 October 2020, remittances over ₹7 lakh under LCS attract a 20% Tax Collected at Source (reduced to 0.5% where the remittance is for education or medical). For a property purchase, that means a chunk of tax is collected upfront by your bank and deposited against your PAN. The good news: TCS is not an additional tax, it is an advance payment. You adjust it against your total income tax liability when you file your return and the excess is refunded.
- Ask your bank for the TCS certificate (Form 27D) so you can claim it back.
- If your total income is below the taxable threshold, the full TCS is refundable.
- Time your remittance near the start of a financial year to recover the refund faster.
Tax on rental income and capital gains
Rental income from Abu Dhabi property is not taxed in the UAE. For an Indian resident, it is added to your global income and taxed at your slab rate, but you can claim a 30% standard deduction on rental income under Section 24 of the Income Tax Act, plus interest on any home loan. Capital gains on selling the Abu Dhabi property are taxable in India as capital gains, whether short or long term. File Schedule FA each year to declare the foreign asset.
- Declare the property and any foreign bank account in Schedule FA of your ITR.
- A Abu Dhabi home loan, if any, is deductible under Section 24(b) up to ₹2 lakh on a self-occupied property.
- Capital gains become long term after 24 months for immovable property, taxed at 12.5% (no indexation).
The 10-year Golden Visa in rupees
A property investment of AED 2 million or more qualifies the buyer, spouse and children for a 10-year renewable UAE Golden Visa. At today's rate that is roughly ₹4.5 crore. Several Modon communities, including Reem Island, Hudayriyat Island and Hudayriyat Golf Estates, have villas and larger apartments that clear the threshold. The visa does not require you to live in Abu Dhabi full time and does not change your Indian tax residency on its own.
Power of attorney and the remote purchase
Most Indian buyers do not need to fly in for every signature. You can issue a Special Power of Attorney to a family member or advisor in Abu Dhabi, attested by the Indian Consulate and the UAE Ministry of Foreign Affairs, which lets them sign the SPA, register with the Abu Dhabi Real Estate Centre and collect keys. We help arrange this paperwork and the escrow wiring so the purchase can complete with one short visit for handover.