NRIs in UAE are getting Foreign Asset Disclosure notices: Why? What to do?
Guide on why the notices are being sent and how NRIs can fix residency and filing issues
Dubai: If you’re an NRI living in the UAE and suddenly received an email or SMS from the Indian Income Tax Department asking you to disclose “foreign assets” or fill something called Schedule FA or Schedule FSI, don’t panic. You’re not the only one. Thousands of NRIs worldwide are getting the same message.
These notices are automated, and in most cases, they’re triggered because of a mismatch in your tax filing—not because you’ve actually done something wrong.
Why are NRIs getting these notices?
India now receives financial information from more than 100 countries every year under a global system called the Common Reporting Standard (CRS). Think of CRS as countries sharing data to prevent tax evasion.
Through this system, India gets details of:
Foreign bank accounts
Interest, dividends and income earned abroad
Investments, property and assets held overseas
This works smoothly—until an NRI files their return in India as a Resident by mistake. If the system thinks you’re a Resident but sees foreign assets in the CRS data, it triggers a mismatch and sends this standard notice.
Did you file your ITRs as a resident?
Many UAE-based NRIs accidentally file returns as Residents because:
Their PAN was never updated to NRI status
They still use an old resident savings account
Their CA in India doesn’t specialise in NRI taxation
When this happens, the tax system assumes you are a Resident Indian. And Residents must report all foreign assets.
NRIs, on the other hand, do not have to fill these foreign-asset schedules.
Who actually qualifies as an NRI?
Under Indian tax law, you’re an NRI if you:
Spend less than 182 days in India in a financial year, or
Spend less than 60 days in that year and less than 365 days in the past four years
Your passport, visa, or Emirates ID doesn’t decide this. Only the number of days you are physically in India counts.
Resident account causes trouble
NRIs aren’t allowed to keep using a resident savings account. Under FEMA rules, you should convert it to:
NRO account – for money earned in India
NRE account – for money earned abroad
If you keep using a resident account, the tax system assumes you are still a Resident—another reason notices get triggered.
Know Schedule FA, Schedule FSI?
Schedule FA = foreign assets (bank accounts, property, shares abroad)
Schedule FSI = foreign income (salary, interest, rent earned abroad)
These apply only to Resident taxpayers, not NRIs. If you received a notice asking you to fill them, your return is being treated as a Resident return.
How NRIs can fix the issue fast
Here’s the simplest way to get back on track:
Confirm your NRI status for FY 2024–25 using the day-count rule.
Use the correct ITR form — NRIs typically use ITR-2.
Don’t fill Schedule FA/FSI if you’re NRI.
Update your PAN and bank KYC to NRI status.
Convert any resident savings account to NRO/NRE.
Get advice from an NRI tax specialist — not a general CA.
Are there penalties?
Yes, if you wrongly file as a Resident and skip reporting foreign assets:
Fine of ₹1 million (Dh41,000) per foreign asset under the Black Money Act
FEMA violations
Tax scrutiny or reassessment
Fixing the classification now prevents all of this.
NRIs to disclose bank accounts at all?
Not always. The Income Tax Department clarified in 2017: You need to disclose your foreign bank account only if:
You don’t have an Indian bank account and want an income-tax refund, or
Your Indian income (like rent) is being credited directly to your foreign bank account.
Otherwise, NRIs do not have to report overseas accounts or foreign assets.
Bottom line
If you received a foreign-asset notice, it’s usually a paperwork issue—most likely your PAN or bank account still shows you as a Resident. Correcting your status solves it.
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