Taxman issued Tax Notice to Indians over Undisclosed Dubai Properties

Many wealthy Indians with allegedly 'undeclared' properties in Dubai have recently received notices from the tax authorities.

Tax Notice to Indians over Undisclosed Dubai Properties

Reetu | Nov 1, 2024 |

Taxman issued Tax Notice to Indians over Undisclosed Dubai Properties

Taxman issued Tax Notice to Indians over Undisclosed Dubai Properties

Fireworks from the taxman can damper the Diwali spirit for some. Many wealthy Indians with allegedly ‘undeclared’ properties in Dubai have recently received notices from the tax authorities.

The Foreign Asset Investigation Unit (FAIU), a division of the Income Tax department, is said to have served approximately 100 notices in the last week. The missives were prompted by a plethora of information supplied by United Arab Emirates (UAE) officials on property ownership by Indian passport holders who have spent less than 90 days in the West Asian country, according to a source familiar with the situation.

In recent years, many Indians have been attracted by Dubai real estate deals that often need only a 10% down payment, with the remaining balance payable in payments over four to eight years.

Individuals who spend more than 90 days in the UAE may obtain resident status. Additionally, people staying for 181 days or more can take advantage of provisions in the India-UAE tax treaty.

Tax authorities rarely obtain details of people’s offshore property holdings because multiple jurisdictions frequently share information such as bank accounts, stock investments, and trust beneficiaries. They have a complete set of data on Dubai real estate deals, which developers aggressively market by offering fancy payment options.

Following these notices, the FAIU has requested that numerous Indian citizens evaluate whether the funds utilized for their Dubai property purchases are derived from lawful income and correctly stated in their foreign asset schedules on their income tax returns.

The government is implementing a verification process to confirm that tax money was used for these purchases. If the source of funds is verified, even if the asset was not stated on the FA schedule, taxpayers may avoid heavy penalties under the Black Money Act. If the source cannot be traced, they may face significant taxes and penalties that surpass the value of the assets.

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