UAE-based Indian expats warned to prepare early for new ITR filing rules

Dubai: Indian expatriates in the UAE are being urged to prepare documents early for filing Income Tax Returns (ITR) for the Financial Year 2025-26, as tax experts warn that delays could lead to penalties, refund issues and loss of tax benefits.

The filing relates to Assessment Year 2026-27, with taxpayers expected to submit returns before the July 31, 2026 deadline to avoid late fees and compliance complications.

The filing season also comes ahead of wider changes to India’s tax documentation system from April 2026, when several commonly used income tax forms will be renumbered under the proposed Income-tax Rules, 2026.

Tax experts warned the transition could create confusion for overseas Indians unless documents and compliance records are organised well in advance, adding that many UAE-based Indians still underestimate the paperwork needed for Indian tax filings, especially those with investments, rental income or financial assets in India.

“As the filing deadline approaches, taxpayers should begin organising financial documents early to ensure a smooth and timely filing process,” said Dixit Jain, Chartered Accountant and Director at The Tax Experts DMCC.

According to Jain, Indian expats should prepare:

Tax consultants say delays often happen because taxpayers struggle to gather capital gains statements, rental records and overseas-linked financial documents close to the filing deadline.

India’s tax compliance framework is also undergoing a major restructuring from April 2026 under the proposed Income-tax Rules, 2026, aimed at simplifying compliance and improving digital processing.

Several widely used forms are being renumbered:

The proposed framework is intended to align tax reporting with automated systems such as Annual Information Statements (AIS), pre-filled returns and digital compliance platforms.

Tax professionals say expatriates with overseas income, remittances or foreign tax credit claims may need to pay closer attention to documentation requirements under the revised framework.

Draft rules released for consultation also propose additional reporting requirements for some non-residents, including Tax Identification Numbers (TINs), foreign remittance disclosures and enhanced verification procedures.

Jain said timely filing remains important even for expats who believe no tax may be payable in India. “Many taxpayers only realise the importance of filing after missing refund claims or losing the ability to carry forward losses,” he reiterated earlier.

According to Jain, filing after July 31, 2026 could attract penalties of up to Rs5,000 under Indian tax rules. Tax experts also warn that excess Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) amounts can only be reclaimed through a properly filed return.

Losses from shares or mutual funds also cannot generally be carried forward unless reported within the filing deadline, which could affect future tax planning for investors actively trading Indian equities or funds.

Tax professionals say residency calculations are becoming increasingly important for UAE-based Indians because Indian tax obligations can change depending on the number of days spent in India during a financial year.

Under Indian tax rules, residency status can influence how global income, foreign assets and overseas earnings are treated for taxation purposes.

Filed ITRs are also commonly required for home loans, visa applications, insurance claims and investment-related financial checks in India.

Experts advise taxpayers with property income, investments or complex cross-border finances to avoid waiting until the final weeks before the deadline, as document reconciliation and compliance checks can take time.

With millions of Indians living and working in the UAE, tax consultants expect another busy filing season as more expatriates seek guidance on changing compliance requirements and revised tax reporting systems.