The number of Indian nationals buying property in the Gulf is expected to decline after the new government removed an exemption on capital gains tax for those buying property overseas.
Indians who sell property and buy another residence within two years, or within three years for newly built homes, are exempt from the 20 percent tax on capital gains – the profit made after taking into account inflation.
However, in releasing its first budget since being voted into office in May, Narenda Modi’s new government has amended a clause in the legislation to only allow the exemption when the subsequent property is bought in India.
The change could affect thousands of Indian nationals who have invested in the Gulf.
According to Dubai Land Department figures, about one-quarter of the $9.8bn invested in the emirate’s property market in 2012 was by Indian nationals, making them the highest foreign investors in the sector.