Legal authorities are issuing stern warnings to non-resident Indians in the UAE regarding property transactions involving resident Indian friends. Recent advisory highlights significant legal risks when NRIs make property payments on behalf of residents in India, contrary to foreign exchange regulations.
The Reserve Bank of India’s Liberalised Remittance Scheme permits resident Indians to remit up to $250,000 annually for specified transactions, including overseas property acquisitions. However, when non-resident Indians or foreign citizens make payments on behalf of resident Indians, this constitutes a violation of Section 3(a) of the Foreign Exchange Management Act (FEMA).
The Enforcement Directorate has demonstrated increased vigilance in investigating such cases, treating them as serious contraventions of exchange control regulations. Offenses under FEMA are compoundable but involve substantial financial penalties for the resident Indian beneficiary, who becomes subject to comprehensive investigation procedures.
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Legal experts emphasize that cross-border financial assistance for property purchases, while well-intentioned, exposes both parties to significant regulatory consequences and recommend strict adherence to authorized banking channels for all international remittances.