India’s new tax compliance scheme targets undisclosed foreign assets, raising questions for Indians living in the UAE about their property holdings and tax reporting obligations.
Indian nationals living in the UAE who own residential or commercial property may need to review their Indian income tax returns after the Income Tax Department began contacting select taxpayers over potentially undisclosed overseas assets.
According to Indian media reports citing Finance Ministry sources, the department has sent communications to certain taxpayers who invested in UAE properties, asking them to check whether their foreign assets and related income were correctly reported in India.
The outreach comes as the government promotes the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS), a voluntary compliance scheme that allows eligible taxpayers to disclose certain previously unreported foreign assets and income. The deadline for declarations is December 31, 2026.
Around 1,100 applications had been received, according to Finance Ministry sources cited in the reports.
For Indian expats, the key question is whether their overseas holdings and any relevant income have been disclosed in accordance with Indian tax rules. Receiving a tax advisory does not automatically mean a taxpayer has violated the law.
FAST-DS 2026: Key Details at a Glance
| Scheme detail | Reported information |
|---|---|
| Declaration deadline | December 31, 2026 |
| Applications received | Around 1,100 |
| First category | Eligible undisclosed foreign assets or income up to Rs 1 crore |
| Second category | Eligible previously taxed assets or assets acquired while non-resident, worth up to Rs 5 crore |
| Payment under first category | 60% of the applicable declared value or income |
| Payment under second category | Fixed fee of Rs 10 lakh, subject to eligibility |
The two categories have different eligibility conditions and payment requirements. Taxpayers should check the scheme’s official rules before deciding which category, if any, applies to them.
Why Is India Contacting UAE Property Owners?
The Income Tax Department has reportedly contacted selected investors who purchased residential or commercial properties in the UAE, encouraging them to review their foreign-asset disclosures.
The communications are intended to prompt voluntary compliance. A notification or advisory is not, by itself, a tax demand or proof that a property was purchased using undisclosed income.
However, if a taxpayer discovers that a reportable asset or relevant income was omitted from a required return, the omission may need to be addressed under the applicable tax rules.
The Economic Times, Hindustan Times, and The Indian Express have reported on the department’s outreach and the FAST-DS initiative. The scheme’s forms and filing procedures are available through the Income Tax Department’s e-filing portal.
How India Receives Information About Foreign Assets
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 reports, the Income Tax Department has introduced a facility on its e-filing portal that allows taxpayers to view foreign-asset information reported against their Permanent Account Numbers (PANs). The information available through this facility covers 2022, 2023, and 2024.
However, the portal may not contain all the information available to the department. Finance Ministry sources cited in the reports said the authorities also receive information through other international arrangements and sources, some of which may not appear in the taxpayer-facing facility.
At a meeting on October 23, the department reportedly decided to share additional information with relevant taxpayers wherever possible.
Earlier reports also described emails and messages sent to taxpayers about overseas stocks, bank accounts, and other assets. Some communications reportedly carried the subject line, “Important advisory: opportunity for voluntary compliance regarding FAST-DS, 2026”.
Who Can Apply Under FAST-DS 2026?
The scheme covers two broad categories of eligible declarations, with different payment requirements.
1. Undisclosed Foreign Assets or Income Worth Up to Rs 1 Crore
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 relevant undisclosed foreign income.
- Additional amount: An amount equal to the tax.
The combined payment is therefore 60% of the applicable declared value or income, subject to the scheme’s conditions.
Taxpayers should confirm how the value is calculated and whether the asset or income falls within the permitted scope of the scheme before filing.
2. Previously Taxed Assets or Assets Acquired While Non-Resident, Worth Up to Rs 5 Crore
The second category covers eligible foreign assets acquired using income already offered to tax in India, or assets acquired while the taxpayer was a non-resident, but omitted from the relevant foreign-asset schedule in an Indian tax return.
Eligible taxpayers can make a declaration by paying a fixed fee of Rs 10 lakh, subject to the scheme’s conditions.
This category may be relevant to individuals who purchased property overseas using documented funds but did not report the asset in the required section of their Indian tax returns.
The distinction between the two categories is important. The payment amount depends on the source of funds, the taxpayer’s residency status in the relevant year, the nature and value of the asset, and the scheme’s eligibility rules.
What UAE Property Owners Should Do Before December 31
Indian expats who own property in Dubai, Abu Dhabi, or elsewhere in the UAE should review their records before deciding whether a declaration is necessary.
- 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 foreign-asset information linked to your PAN for 2022, 2023, and 2024.
- Keep purchase documents: Retain property agreements, payment receipts, bank statements, and evidence showing the source of investment funds.
- Confirm your tax residency: Establish whether you were resident in India or a non-resident when the asset was acquired and when any related income arose.
- Consult an Indian tax professional: Ask a qualified adviser to assess any reporting omission and confirm whether FAST-DS applies.
- Observe the deadline: Eligible declarations must be submitted 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 reportedly been established to help taxpayers resolve questions about the scheme.
What Happens If You Do Not Use the Scheme?
FAST-DS is voluntary. Choosing not to use it does not automatically mean that a taxpayer has committed a tax default. Someone whose overseas assets and related income have been correctly reported under the applicable rules may not need to make a declaration.
However, if an eligible reporting omission remains unresolved and the asset or income is subsequently treated as undisclosed, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, may impose significant consequences.
Depending on the circumstances and applicable legal provisions, these can include:
- Tax of 30% on the relevant undisclosed foreign asset or income.
- A penalty equal to three times the tax under Section 41, where applicable.
- A separate penalty of Rs 1 crore under Sections 42 or 43 for specified failures involving foreign assets or income, subject to statutory conditions and exemptions.
- Possible prosecution in cases where the legal requirements for criminal liability are met.
The Act also provides an exemption for certain foreign assets with an aggregate value not exceeding Rs 20 lakh in specified circumstances. However, that exemption does not extend to foreign immovable property.
A valid FAST-DS declaration may 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.
Taxpayers should obtain professional advice before relying on an exemption or assuming that an omission qualifies for the scheme.
What Indian Expats With UAE Property Need to Remember
India’s latest outreach puts overseas asset reporting back in focus for Indian nationals living in the UAE. The December 31 deadline gives eligible taxpayers a limited opportunity to address certain disclosure omissions under FAST-DS 2026.
Owning property in the UAE does not automatically mean that Indian tax is payable on its full value. Reporting obligations and potential tax liabilities depend on factors such as the individual’s Indian tax residency, the source of investment funds, the type of asset, and any income generated by it.
The priority for property owners is to establish whether their assets and relevant income were reported correctly. Anyone who receives a tax advisory or discovers a possible omission should review the records and seek professional advice before deciding whether to make a declaration.
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Deadline looms for voluntary disclosure of UAE properties under Indian tax rules
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Source: Gulf News
