Rs.700 Crore Tax Evasion detected from investigation of 500 Dubai Property Cases

The Income Tax Department has discovered more than 500 ‘actionable’ cases involving undeclared immovable properties owned by Indians in as per a report. Raids conducted in Delhi alone have found unaccounted transactions worth more than Rs.700 crore, report stated citing sources.

The Delhi investigation arm of the IT department has undertaken over a dozen searches, revealing evidence of 43 undisclosed properties of Dubai. The suspected evasion in Delhi alone exceeds Rs.700 crore. According to the report, as the probe expands nationwide, the sum could reach several thousand crores.

India has recently acquired information from Germany regarding assets owned by Indians in West Asia. The data was shared under the ‘Spontaneous Exchange of Information’ framework of the two countries’ Double Taxation Avoidance Agreement. It includes information on properties owned by over 1,000 Indian nationals, although it is uncertain how German authorities obtained the information.

In the course of the Delhi searches, taxpayers admitted to investing more than Rs.125 crore in undisclosed funds, according to the official. The government also identified faked receipts and records of purchases and cash payments which were being investigated to determine the tactics utilized to hide unaccounted wealth abroad, the level of asset non-disclosure, and the probable amount of black money involved. Legal action under the Income Tax Act or the Black Money Act is under consideration.

Since October, the Foreign Asset Investigation Unit (FAIU) has sent notices to many wealthy Indians who reportedly own undocumented properties in Dubai. According to sources, approximately 100 notices were issued in the last week alone.

This action followed information supplied by UAE authorities about property ownership by Indian passport holders who have been in the UAE for less than 90 days.

The real estate market of Dubai has attracted a large number of Indian investors in recent years, with schemes seeking as little as a 10% down payment and the balance payed over several years.

Indian people who have been in the UAE for more than 90 days can get residency status, and those who stay for more than 181 days may benefit from provisions under the India-UAE tax treaty. However, these protections do not apply to non-residents, making them subject to scrutiny.

In response to the notices, the FAIU has asked many individuals to affirm that the money used to acquire Dubai properties are legitimate and properly stated in their foreign asset schedules on income tax returns.