Bought property in UAE? India’s tax alert raises questions for expats

Indian expats who own homes, apartments or commercial properties in the UAE may need to check their Indian income tax returns after the Income Tax Department began contacting select taxpayers over potentially undisclosed overseas assets.

According to Indian media reports, the department has recently “nudged select taxpayers” who invested in residential or commercial properties in the UAE, urging them to review whether their foreign assets and income have been correctly disclosed in their Indian tax returns, citing Finance Ministry sources.

The outreach comes as the government promotes the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS), which offers eligible taxpayers a one-time opportunity to disclose certain previously unreported foreign assets and income.

Key details at a glance

• Deadline: December 31, 2026

• Applications received: About 1,100, according to Finance Ministry sources

• Undisclosed foreign assets or income: Up to Rs 10 million

• Previously taxed assets or assets acquired while non-resident: Up to Rs50 million

• Potential payment: 60% under the first category or Rs1 million under the second, subject to eligibility.

For Indian expats, property investors and others with overseas holdings, the key question is whether their assets and any relevant income have been disclosed correctly under Indian tax rules.

What the tax alert means

The Income Tax Department has recently “nudged select taxpayers” who invested in residential or commercial properties in the UAE, according to Finance Ministry sources cited by Hindustan Times.

The communications are intended to encourage taxpayers to review their reporting obligations. A nudge is not, by itself, a tax demand or proof that a property was purchased using undisclosed income.

However, taxpayers who identify a reporting omission should establish whether they need to take corrective action. Failure to address an applicable disclosure requirement could lead to further proceedings under the relevant tax laws.

The Economic Times reported that eligible taxpayers can use FAST-DS to regularise certain undisclosed foreign assets and income before the deadline. The scheme’s forms and procedures are available through the Income Tax Department’s e-filing portal.

How India gets foreign asset details

India receives information about certain overseas financial accounts through international information-sharing arrangements, including the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA).

According to the report, the Income Tax Department has introduced a facility on its e-filing portal that allows taxpayers to view information reported by foreign jurisdictions against their Permanent Account Numbers (PANs).

The available information covers 2022, 2023 and 2024.

However, the portal may not contain all the information available to the department. Sources cited by Hindustan Times said the department also receives information through other international frameworks and sources, some of which is not displayed on the portal.

At a high-level meeting on October 23, the department decided that additional information could also be shared with relevant taxpayers wherever possible, according to the report.

The Indian Express had earlier reported that the department sent emails and messages to taxpayers about overseas stocks, bank accounts and other assets. Some communications carried the subject line: “Important advisory: opportunity for voluntary compliance regarding FAST-DS, 2026”.

FAST-DS: Who can apply?

The scheme covers two broad categories of eligible disclosures, with different payment requirements.

• Undisclosed assets or income up to Rs10 million

This category covers eligible foreign assets or foreign income that was not previously disclosed and, where applicable, was not offered to tax in India.

Eligible taxpayers must pay:

• Tax: 30% of the applicable fair market value of the asset or the undisclosed foreign income.

• Additional amount: An amount equal to the tax.

The combined payment is therefore 60% of the relevant declared value or income, subject to the scheme’s conditions.

• Previously taxed assets worth up to Rs50 million

This category covers eligible foreign assets acquired using income already offered to tax in India, or acquired when the taxpayer was a non-resident, but omitted from the relevant foreign-asset schedule in the Indian tax return.

Eligible taxpayers can make a declaration by paying a fixed fee of Rs1 million, subject to the scheme’s conditions.

This category may be relevant to people who purchased property overseas using documented funds but did not report the asset in the required section of their Indian tax returns.

The two categories are different. The applicable payment depends on the circumstances, the source of funds and whether the asset or income meets the scheme’s eligibility criteria.

What UAE property owners should do

Indian expats and investors with property in Dubai, Abu Dhabi or elsewhere in the UAE should consider these steps:

• Review Indian tax returns: Check whether foreign assets and relevant income were reported in the required schedules for the applicable tax years.

• Check the e-filing portal: Review the foreign-asset information linked to your PAN for 2022-2024.

• Keep supporting documents: Retain purchase agreements, payment records, bank statements and evidence showing the source of funds.

• Check your residency status: Whether you were resident in India or a non-resident when the asset was acquired may affect the applicable disclosure category.

• Seek professional advice: Ask a qualified Indian tax adviser to assess any omission and confirm whether FAST-DS applies.

• Note the deadline: Eligible declarations must be completed by December 31, 2026, in accordance with the scheme’s requirements.

According to Hindustan Times, the department also plans awareness programmes involving employers, educational institutions, professional bodies and industry associations. Regional committees under the Principal Chief Commissioners of Income Tax have been established to help taxpayers resolve queries and concerns.

What if you miss the deadline?

FAST-DS is voluntary. Choosing not to use the scheme does not automatically mean a taxpayer has committed a default. If an overseas asset and its source of funds have been correctly reported under applicable Indian tax rules, the owner may not need to make a declaration.

However, if an eligible omission remains unresolved and the asset or income is subsequently treated as undisclosed, the consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, may be significant.

Depending on the circumstances and applicable legal provisions, these could include:

• Tax of 30% on the relevant undisclosed foreign asset or income.

• A penalty equal to three times the tax under Section 41 of the Black Money Act, where applicable.

• A separate penalty of Rs 10 million under Sections 42 or 43 for specified failures involving foreign assets or income, subject to the statutory conditions and exemptions.

• Possible prosecution in serious cases involving wilful tax evasion or deliberate non-disclosure, where the legal requirements are met.

The Act provides an exemption for specified foreign assets with an aggregate value not exceeding Rs 2 million in certain circumstances. However, this exemption does not apply to foreign immovable property.

A valid FAST-DS declaration can provide immunity from further assessment, penalties and prosecution under the Black Money Act for matters covered by the declaration, subject to the scheme’s conditions.

What UAE investors need to remember

The December 31 deadline gives eligible taxpayers a limited opportunity to address certain overseas asset and income reporting omissions under FAST-DS 2026.

For Indian expats who own property in the UAE, the priority is to check whether their holdings and any relevant income have been reported correctly in India. Access to international financial information means taxpayers should not assume that overseas assets are invisible to their home country’s tax authorities.

Owning property in the UAE does not automatically mean that Indian tax is payable on its value. Reporting obligations and potential tax liabilities depend on factors including residential status, the source of investment funds, the nature of the asset and any income generated.

Anyone who receives a tax nudge or discovers a possible omission should verify their position and seek professional advice before deciding whether to make a declaration.

With inputs from Agencies