Bought Property in UAE? India’s New Tax Scheme Puts Expats on Alert

Indian expats and NRIs who own property in the UAE should review their Indian income tax returns as the December 31, 2026, deadline approaches under the Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS 2026).

India’s Income Tax Department has reportedly contacted selected taxpayers regarding potentially undisclosed overseas assets, including residential and commercial properties in the UAE. The initiative encourages eligible individuals to review their tax filings and correct certain reporting omissions.

What Is India’s FAST-DS 2026 Scheme?

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026, provides eligible taxpayers with a one-time opportunity to disclose certain previously unreported foreign assets and income, subject to the scheme’s conditions.

According to reports citing Finance Ministry sources, the department has received around 1,100 applications under the scheme.

Key details include:

• Application deadline: December 31, 2026
• First category: Eligible undisclosed foreign assets or income of up to ₹1 crore
• Second category: Certain previously taxed assets or assets acquired while non-resident, valued at up to ₹5 crore
• Payment requirements: Depending on eligibility, applicants may need to pay 60% of the relevant declared value or a fixed fee of ₹10 lakh.

The payment amount and eligibility criteria differ between the two categories.

Why Is India Reviewing UAE Property Investments?

The Income Tax Department has reportedly begun contacting selected taxpayers whose overseas investments may not have been properly disclosed in their Indian tax returns.

Receiving such a communication does not automatically mean that a taxpayer has violated the law or owes additional tax. However, it may be an opportunity to check whether all applicable reporting requirements have been met.

India obtains 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).

Taxpayers may also be able to access certain foreign-asset information linked to their Permanent Account Number (PAN) through the Indian income tax e-filing portal. Reported information covers 2022, 2023 and 2024, although the portal may not display every detail available to the tax authorities.

Who Is Eligible for FAST-DS 2026?

The scheme covers two broad categories of eligible disclosures.

1. Undisclosed foreign assets or income up to ₹1 crore

This category applies to qualifying foreign assets or income that were not previously disclosed and, where applicable, were not offered to tax in India.

Eligible applicants may be required to pay:

• Tax at 30% of the applicable fair market value of the asset or the relevant undisclosed income.
• An additional amount equal to the tax payable.

This results in a combined payment of 60% of the relevant declared value or income, subject to the scheme’s terms.

2. Previously taxed assets worth up to ₹5 crore

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

Eligible applicants may be able to declare such assets by paying a fixed fee of ₹10 lakh, subject to the applicable conditions.

This provision may be relevant to individuals who purchased property in Dubai, Abu Dhabi or elsewhere overseas using documented funds but did not report the asset in the required section of their Indian tax returns.

The applicable category depends on the source of funds, the circumstances of the acquisition and the scheme’s eligibility requirements.

What Should Indian Expats Who Own UAE Property Do?

Indian expats and investors with property in Dubai, Abu Dhabi, Sharjah and other parts of the UAE should consider the following steps.

Review Indian tax returns: Check whether overseas properties, foreign assets and relevant income were disclosed in the required schedules for the applicable tax years.

Check the income tax e-filing portal: Review the foreign-asset information linked to your PAN for the available reporting years.

Maintain supporting documents: Keep property purchase agreements, bank statements, payment records and documents establishing the source of investment funds.

Confirm your residential status: Your Indian tax residency when the property was acquired may affect your disclosure obligations and eligibility under the scheme.

Seek professional advice: Consult a qualified Indian tax adviser to determine whether any reporting omission occurred and whether FAST-DS 2026 applies to your circumstances.

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

What Happens If You Miss the December 31 Deadline?

FAST-DS 2026 is a voluntary scheme. Owning property in the UAE does not automatically mean that an individual must pay Indian tax on the property’s value or submit a declaration.

However, an unresolved reporting omission could have serious consequences if the asset or income is subsequently treated as undisclosed under India’s Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Depending on the circumstances and applicable legal provisions, the consequences may 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 ₹1 crore under Sections 42 or 43 for specified reporting failures, subject to statutory conditions and exemptions.
• Possible prosecution in serious cases involving wilful tax evasion or deliberate non-disclosure, where the legal requirements are met.

The law provides an exemption for certain specified foreign assets with an aggregate value not exceeding ₹20 lakh in particular circumstances. However, this exemption does not apply to foreign immovable property.

A valid declaration under FAST-DS 2026 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.

What UAE Property Owners Need to Know

Indian expats who own property in the UAE should check whether their overseas assets and any related income have been correctly reported in India.

The December 31, 2026, deadline may offer eligible taxpayers an opportunity to address certain past disclosure omissions. However, the applicable requirements and potential tax liabilities depend on individual circumstances, including Indian residential status, the source of funds, the nature of the asset and any income generated.

Anyone who receives a communication from the Income Tax Department or discovers a possible omission should review their records and seek professional advice before deciding whether to make a declaration.