If you're an Indian professional living in Dubai and recently received a notice from the Income Tax Department about foreign asset disclosure, you're not alone. Thousands of NRIs across the UAE are facing similar notices, often leaving them confused and anxious about what went wrong.

The good news? In most cases, these notices are straightforward to address once you understand what's happening. Let's break down everything you need to know about foreign asset disclosure requirements and how to stay compliant.

Why Are UAE-Based NRIs Getting These Notices Now?

The Indian tax authorities have significantly enhanced their surveillance capabilities through the use of advanced data analytics and artificial intelligence. They're now cross-referencing information from multiple sources, including:

• Banking transactions and international fund transfers

• Property registration databases across Indian states

• Information exchange agreements with foreign countries (including the UAE)

• Annual Information Returns (AIR) from financial institutions

• Foreign Remittance reports

This technological upgrade enables the Income Tax Department to automatically flag discrepancies between your reported income, foreign assets, and actual financial activities.

Understanding Your Residential Status: The 182-Day Rule

Here's where many NRIs get tripped up. Your residential status for Indian tax purposes isn't just about having a UAE residence visa or work permit. The Indian Income Tax Act has specific criteria, and the most important one is the 182-day rule.

You're considered a Resident in India if you've been in India for 182 days or more during the financial year. If you're a resident, you must disclose your worldwide income and assets, such as:

• Properties you own anywhere in the world (including Dubai)

• Bank accounts held outside India

• Investments in foreign mutual funds or stocks

• Any other foreign financial assets

Many professionals who work in Dubai but frequently visit India for family, business, or personal reasons inadvertently cross this 182-day threshold without realizing the tax implications.

What Assets Must Be Disclosed in Schedule FA?

If you're required to file an Indian tax return and hold foreign assets, you must complete Schedule FA (Foreign Assets). This includes:

Financial Accounts:

• Bank accounts held outside India

• The maximum balance during the year must be reported

• Yes, your UAE salary account counts as a foreign asset

Immovable Property:

• Any real estate owned outside India, including your Dubai apartment or villa

• You must report the address, ownership date, and total investment

Financial Interests:

• Foreign company shares or partnership interests

• Mutual funds, bonds, or other securities held abroad

The key point: Even if these assets don't generate taxable income in India, they still need to be disclosed if you're filing as a resident.

Common Reasons for Receiving Disclosure Notices

Based on patterns we've observed among UAE-based Indians, here are the most common triggers:

• Property Transactions in India: You sold a property in India and repatriated funds to the UAE, but didn't file returns to reflect this transaction.
• Rental Income Not Reported: You own property in India that generates rental income, but assume it's automatically exempt because you're abroad.
• High-Value Transactions: Large deposits or purchases that seem inconsistent with your reported income.
• NRO Account Activity: Significant credits to your Non-Resident Ordinary account that weren't explained in tax filings.
• Mismatch in TDS Records: Tax was deducted at source in India, but no return was filed to claim the credit or reconcile the amount.

What Should You Do If You Receive a Notice?

• Don't Panic, But Don't Ignore It: Tax notices have specific response deadlines, typically 15 to 30 days. Missing these can result in penalties.
• Determine Your Actual Residential Status: Calculate the exact number of days you spent in India for the relevant financial year. Keep travel records, including passport stamps and boarding passes, as evidence.
• Gather Documentation: Collect all relevant documents, including bank statements, property documents, investment proofs, and income evidence from both India and the UAE.
• File or Revise Your Returns: If you haven't filed, consider filing a belated return. If you filed incorrectly, file a revised return.
• Consider Professional Help: Given the complexity of cross-border taxation and DTAA provisions, consulting a chartered accountant with international tax expertise is highly recommended.

Respond formally by replying to the notice through the Income Tax portal, accompanied by proper documentation.

The Dubai Advantage: Simpler Asset Management

One reason many Indians choose to invest in Dubai real estate is the significantly simpler tax environment. The UAE does not impose personal income tax, capital gains tax on property, or wealth tax. This means:

• Your Dubai property doesn't generate complicated tax obligations

• No annual property tax calculations or filings

• Transparent ownership through DLD (Dubai Land Department)

• Cleaner financial record-keeping

For NRIs juggling properties in both countries, many are finding that consolidating their real estate portfolio in Dubai offers peace of mind alongside strong investment returns.

Key Compliance Tips for UAE-Based NRIs

• Maintain Clear Records: Keep detailed records of all India-related financial transactions, including property dealings, investments, and remittances.
• Track Your India Visits: Maintain a spreadsheet of your India visits with exact dates to always know your residential status.
• Update Your Status with Banks: Ensure your Indian banks have your correct residential status (NRI/Resident) to apply appropriate TDS rates.
• File Returns Even With No Tax Liability: If you have transactions in India, filing returns creates a clear record and protects you from notices.
• Understand DTAA Benefits: The India-UAE tax treaty protects you from double taxation. Ensure you're claiming these benefits correctly.

Looking Ahead: Stricter Compliance Environment

The trend is evident as tax authorities globally are sharing more information and using better technology to track cross-border assets. India has joined the Common Reporting Standard (CRS), which means automatic information exchange with over 100 countries.

For NRIs in the UAE, this means greater transparency of your UAE banking activities to Indian authorities and increased scrutiny on high-net-worth individuals with global assets. The best strategy is proactive compliance rather than reactive damage control.

Final Thoughts

Receiving a tax notice doesn't mean you've done something wrong intentionally. Often, it's simply a matter of not understanding the complex interplay between NRI status, residential status, and disclosure requirements.

As Indians building successful careers and lives in Dubai, staying compliant with tax obligations in both countries isn't just about avoiding penalties; it's about maintaining clean financial records that serve you well, whether you're buying property, applying for loans, or planning your eventual return to India.

If you're reassessing your property portfolio in light of these compliance requirements, remember that Dubai offers compelling advantages, including strong returns, zero tax complications, and a transparent and investor-friendly regulatory environment.

Watch our YouTube video where we break down everything about foreign asset disclosure for NRIs in Dubai.https://youtu.be/KRpq62C3L3c?si=KwmAcvnLxQQKq_8O