Gifting a Dubai Flat to Your Spouse or Children: FEMA, Indian Tax and Reporting

A resident Indian can gift a Dubai flat to a resident relative under FEMA's 2022 overseas investment rules, if you bought the flat legally. A gift from a relative is not taxed in India. But if you gift the flat to your spouse or a minor child, the rent is still taxed as your income, and both of you may need to show it in Schedule FA that year.

This page covers property located in Dubai, seen from India. For gifts of property in India to or from NRIs and OCIs, see our guide to gifting Indian property to an NRI.

Key takeaways

• FEMA: Rule 21 of the Overseas Investment Rules, 2022 lets a resident gift foreign property to another resident who is eligible to hold it, if the donor acquired it in line with the rules then in force.
• Gift to a non-resident relative: the rules don't spell it out, and commentators disagree. Ask your bank or the RBI first.
• Indian tax: gifts from a relative are exempt under s.92 of the Income-tax Act, 2025 (s.56(2)(x) of the old Act).
• Clubbing: gift a flat to your spouse or a minor child and you are treated as its owner for the rent.
• Dubai side: the DLD charges 0.125% of value, minimum AED 2,000, for a gift to a spouse, parent or child.

Rupee figures use AED 1 = about Rs 26.1.

The Dubai side, in one paragraph

Dubai allows a gift, or hiba, only to first-degree relatives: a spouse, parents or children. The DLD no longer accepts gift transfers between siblings. The fee is 0.125% of the assessed value with a minimum of AED 2,000, plus AED 250 for the new title deed and a trustee office fee of AED 2,000 plus VAT below AED 2 million, or AED 4,000 plus VAT above. Our guide to the title deed in Dubai covers adding a spouse or family member and the documents.

What FEMA allows

Gift to a resident relative

Rule 21 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 starts from a ban: no person resident in India may acquire or transfer immovable property outside India without RBI permission, except as the rules allow. The exceptions matter here:

• A resident may acquire foreign property by gift or inheritance from another resident who acquired it in line with the foreign exchange rules in force at the time.
• A resident who acquired foreign property properly may transfer it by gift to a resident who is eligible to acquire it under the rules, or by sale.

So a flat you bought with LRS remittances, properly documented, can be gifted to your resident spouse, child or parent without RBI approval. Keep your original Form A2 and remittance records; they are the donee's proof that the chain is clean.

Gift to a non-resident relative

This is less clear. The rule's gift wording names a resident recipient. Some commentators say a property bought under the LRS can be gifted to a non-resident; others note the rules don't spell out gifts to non-residents and advise getting RBI approval first to avoid a FEMA breach. If your child lives abroad, raise it with your authorised dealer bank before the DLD transfer, not after.

Indian tax on the gift, and on the rent afterwards

The relative exemption

India has no separate gift tax. Instead, property received without consideration can be taxed as the recipient's income. That rule now sits in s.92 of the Income-tax Act, 2025, which replaced s.56(2)(x) from 1 April 2026, with the same Rs 50,000 threshold, the same definition of "relative" and the same exemptions.

A gift from a relative is fully exempt, whatever its value, and relatives as the Act defines them include a spouse, parents, children and siblings. A Dubai flat gifted by a parent to a child, or between spouses, is therefore tax-free for the recipient. For the wider choice between a gift and a will, see gift deed vs will.

Clubbing: when the rent stays yours

Two rules stop you from shifting rental income to a family member in a lower tax bracket:

• Deemed ownership of house property. If you transfer a house, other than for adequate consideration, to your spouse (unless under an agreement to live apart) or to a minor child other than a married daughter, you are treated as its owner. That provision is s.25 of the 2025 Act (s.27 of the old Act). The rent is taxed as your income.
• Clubbing of other assets. Income from other assets transferred to a spouse without adequate consideration is clubbed with the transferor's income under s.99 of the 2025 Act (s.64 of the old Act).

One wrinkle: if you give your spouse cash and they buy the flat with it, you are not the deemed owner, but the income from it is still clubbed with yours. Gifts to adult children and parents are not caught; they declare the rent themselves.

Recipient by recipient

The donee's cost and holding period

When the donee later sells, the gift is not treated as their purchase. Their cost is the donor's original cost, plus any improvements, and their holding period includes the time the donor held the flat. This is the old s.49(1) rule, carried into the 2025 Act.

Property held over 24 months is long-term. For land or buildings acquired before 23 July 2024, a resident individual can pay the lower of 12.5% without indexation or 20% with indexation; later acquisitions pay 12.5% without indexation. Our guide to tax on Dubai property for Indian buyers covers the currency conversion on a sale, which can matter as much as the rate.

Worked example: a husband gifts a flat to his wife

Suppose a resident husband bought a Dubai flat under the LRS and in 2026 gifts it to his resident wife, when the DLD values it at AED 1.5 million (about Rs 3.9 crore). It rents for AED 80,000 a year.

• DLD cost: 0.125% of AED 1.5 million is AED 1,875, so the AED 2,000 minimum applies. Add AED 250 for the title deed and AED 2,100 for the trustee fee with VAT. Total about AED 4,350, or Rs 1.14 lakh. A sale at the same value would carry a 4% transfer fee of AED 60,000.
• Gift tax: nil for the wife, because a spouse is a relative.
• Rent: the AED 80,000, about Rs 20.9 lakh, is still taxed in the husband's return, because he is the deemed owner.
• A later sale by the wife: her cost is his original cost and her holding period starts from his purchase date. Whether the gain is also taxed in his hands is a point to settle with your tax adviser before the sale.

Had the gift gone to an adult son instead, the rent would be the son's income from the date of the gift.

Schedule FA for donor and donee

Schedule FA asks about foreign assets held at any time during the calendar year. In the year of the gift, the donor still reports the flat in Table C (immovable property) because they held it for part of the year, and a resident donee reports it from that year onward. A non-resident donee doesn't file Schedule FA. Our walkthrough of Schedule FA for foreign property covers the fields.

When a gift is the wrong tool

• Siblings. The DLD no longer registers gifts between brothers and sisters, so a sale or a will is the route.
• Tax saving. Gifting to a spouse or minor child to cut tax on the rent doesn't work, because of deemed ownership.
• A non-resident child. The FEMA position is unsettled; get approval first.
• Keeping control. A gift is final. If you want the flat to pass on death instead, look at a will; our guide to wills and inheritance for Dubai property covers the Dubai side.

Frequently asked questions

Can a resident Indian gift a Dubai flat to their spouse?

Yes. FEMA's 2022 overseas investment rules let a resident gift foreign property to another resident who can hold it, if the donor bought it legally, such as with LRS remittances. Dubai accepts gifts to a spouse, parents or children at a DLD fee of 0.125% of value, minimum AED 2,000, plus title deed and trustee fees.

Is a gift of Dubai property taxable in India?

Not when it comes from a relative. Section 92 of the Income-tax Act, 2025, which replaced s.56(2)(x), exempts gifts from relatives such as a spouse, parents, children and siblings, whatever the value. Gifts from non-relatives worth more than Rs 50,000 are taxed as the recipient's income. Rent after the gift may still be taxed in the donor's hands.

Who pays tax on the rent after I gift the flat to my wife?

You do. Under the deemed ownership rule, now s.25 of the 2025 Act (s.27 of the old Act), a person who transfers a house to their spouse without adequate consideration is treated as its owner. The same applies to a gift to a minor child other than a married daughter. Rent from a flat gifted to an adult child is the child's income.

What is the cost of a gifted Dubai flat when the recipient sells it?

The donor's original cost, plus any improvements, and the holding period includes the time the donor owned it. So a flat bought in 2021 and gifted in 2026 is long-term if sold in 2027. For property acquired before 23 July 2024, a resident individual can choose 12.5% without indexation or 20% with it.

Can I gift my Dubai flat to my brother?

Not as a gift in Dubai. The DLD now registers gifts only between first-degree relatives: spouses, parents and children, and it no longer allows gift transfers between siblings. A sale at an agreed price or a will are the alternatives. In India a sibling is a relative for gift tax, but that doesn't help if Dubai won't register it.

If you are planning to pass a Dubai flat to family, the Realty Hunting team can help you line up the Dubai transfer with the India-side paperwork.