Tax notices issued to wealthy Indians over undeclared Dubai properties
New Delhi, Oct 31, 2024
UAE authorities shared details of offshore properties of affluent Indians who spent less than 90 days in the country, thereby not protected by residency permits
Several wealthy Indians with allegedly undeclared properties in Dubai have received notices from the Foreign Asset Investigation Unit (FAIU) of the Income Tax (I-T) department, according to a report by The Economic Times. Approximately 100 notices have been issued in the past week alone.
The action follows an exchange of information from the United Arab Emirates (UAE) authorities regarding property ownership by individuals holding Indian passports who have spent less than 90 days in the country.
In recent years, many Indians have been lured by Dubai real estate offers, which often require only a 10 per cent down payment, with the remaining balance payable in installments over four to eight years.
Individuals who spend over 90 days in the UAE can gain residency status. Additionally, those staying for 181 days or more can benefit from provisions in the tax treaty between India and the UAE. While the UAE may not readily share information about individuals who are already residents and covered under this treaty, it seems this form of protection does not extend to those who have not gained residency status in the country.
The Economic Times report mentions that this information exchange is especially significant as tax authorities rarely receive such detailed insights into offshore property holdings. This is because jurisdictions typically extend to information related to bank accounts, stock investments, and trust beneficiaries.
In the wake of these notices, many Indian nationals have been asked by the FAIU to verify whether the funds used for their Dubai property acquisitions are sourced from legitimate income and properly disclosed in their foreign asset schedules on their I-T returns.
The government is conducting a verification process to ensure that taxed money was used for these acquisitions. If the source of funds is established, even if the asset was not declared in the FA schedule, the taxpayers may be spared from severe penalties under the Black Money Act. Conversely, if the source cannot be traced, they may face heavy taxes and fines that could exceed the value of the assets.
[The Business Standard]
