ED's Money Laundering Probe Into Dubai Property Buyers: Report
An investigation is likely into the buyers of properties in Dubai by the central agency Enforcement Directorate (ED). With data gathered from the Income Tax (I-T) department and the Reserve Bank of India, the ED has reportedly collected information from various sources regarding the matter.
The probe agency will issue notice to buyers in Dubai if they have violated foreign exchange laws and committed money laundering to purchase offshore assets, reports Economic Times, citing sources.
Read Also: Income Tax Raided Al-Muqtadir Jewellery Group? Chairman Denies Scam Allegations
It is reported that many might have breached the foreign exchange currency regulation when they were given offers such as trivial down payments by developers in the Dubai realty market. As per the report, the enforcement agency would invoke the Prevention of Money Laundering Act (PMLA) in cases where the I-T department believes that there has been a violation of the black money law. When the I-T department finds violations, the ED may pursue the matter under PMLA.
There are various possibilities to worry about transactions made by the stakeholders in the process that could amount to violating regulations of the Foreign Exchange Management Act. The transactions use export proceeds to buy properties instead of bringing the money back to India, investing funds received as gifts from a non-resident relative to buy properties abroad, and tapping the hawala channel to acquire overseas assets instead of using local banks to transfer funds abroad under the RBI’s liberalized remittance scheme (LRS) might face scrutiny.
The Liberalised Remittance Scheme (LRS), rules that allow Indian residents to send money abroad for certain transactions, only permits individuals to invest $250,000 a year to buy foreign securities and properties. However, the FEMA rules, guidelines for foreign exchange transactions in India, could have been disregarded by using cryptocurrencies—either purchased on an overseas exchange or moved through the blockchain network to pay a UAE developer, the report adds.
It is also said that some buyers are noticed to have violated the EMA by entering into certain deals. Rajesh P Shah, partner at CA firm Jayantilal Thakkar and Company, says the data relating to the overseas assets has been shared with the ED office, which will now ask for information from the people in question. He went on to say that the ED was given the power to call for information under section 37 read with section 133(6) of the Income-tax Act, warning those associated with the matter about the potential action from the law enforcement officials.
Evading tax on income from unreported foreign sources would come under violations under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. The development would thus make it difficult for buyers to showcase their source of funds for purchasing properties in the Emirate.
