Get a grip on the grey areas before you purchase real estate abroad

Apart from proving to that taxman that the value of the property is commensurate with your income and that you've complied with FEMA, there are other RBI-related issues to be considered

The income-tax (I-T) department has launched a major operation to investigate cases of illegal funds and properties stashed abroad by Indians. There were recent reports that the I-T department has launched investigations against at least 7,500 Indians who have bought properties in Dubai in the last few years.

Purchasing a property abroad can get complex depending on the structure that a buyer uses for the transaction. “The tax department may want to know the source of funds and the Reserve Bank of India (RBI) wants to know whether the individual stuck to the Liberalised Remittance Scheme (LRS) regulations,” says Ashok