India’s new foreign asset disclosure scheme gives eligible taxpayers an opportunity to address certain past reporting omissions. But before the 31 December 2026 deadline, there is one important question to answer: Was your overseas asset properly reported in India?
Imagine this.
You worked in Dubai for several years, saved your earnings, and bought an apartment. You later returned to India. The property remains in your name, the purchase was legitimate, and you have been paying the expenses associated with it.
You may assume that because the money was earned abroad and the property is outside India, there is little to worry about.
But what if your Indian income tax return never disclosed that property?
That is the issue now facing some Indian taxpayers as the Income Tax Department steps up its efforts to identify undisclosed foreign assets. Recent reporting by The Indian Express indicates that the Department has contacted selected taxpayers with UAE property investments and encouraged them to consider the Foreign Assets of Small Taxpayers–Disclosure Scheme, 2026 (FAST-DS).
For eligible taxpayers, the scheme offers an opportunity to address certain past omissions. The deadline is 31 December 2026.
The tax department may have information about your overseas assets
International borders do not necessarily prevent tax authorities from obtaining information about financial assets held abroad.
India participates in international information exchange arrangements, including the Common Reporting Standard (CRS). Under these arrangements, participating jurisdictions exchange specified financial account information with relevant tax authorities.
This information can help tax authorities identify overseas financial accounts associated with taxpayers and compare the information received with their tax returns.
The Income Tax Department has also made certain foreign asset information received under CRS and the US Foreign Account Tax Compliance Act (FATCA) arrangements available through its e-filing portal for 2022, 2023 and 2024.
There is an important distinction, however. Financial account information and information about direct ownership of real estate are not the same thing. A UAE apartment does not necessarily appear in a CRS report simply because it is owned by an Indian taxpayer. Information may come from other sources or arrangements, depending on the circumstances.
The practical message is clear: taxpayers should not assume that an overseas asset will remain outside the view of Indian tax authorities.
Is owning property abroad a tax problem?
No. Owning property overseas is not, by itself, a tax violation.
The issue is whether you have complied with the Indian tax rules applicable to your circumstances.
For example, an Indian resident who owns an apartment in Dubai may need to disclose it in the foreign asset schedule of the applicable income tax return. Rental income, capital gains and other income from the property may also have Indian tax implications, depending on the taxpayer’s circumstances and the applicable rules.
Now consider someone who purchased the same apartment using savings accumulated while living and working in the UAE as a non-resident.
The source of the purchase money may be entirely legitimate. Yet the person may still have a foreign asset reporting obligation after becoming an Indian resident.
The source of your money and your obligation to report an overseas asset are two separate questions.
Understanding that distinction is particularly important for returning expatriates, professionals receiving overseas shares, and individuals who have inherited property or investments abroad.
FAST-DS 2026: An opportunity to correct certain omissions
The Foreign Assets of Small Taxpayers–Disclosure Scheme, 2026, provides eligible taxpayers with a route to declare specified foreign assets or income that were previously omitted, subject to the scheme’s conditions.
The scheme distinguishes between two broad situations.
1. Foreign assets or income that were not disclosed and may involve unpaid tax
One category covers eligible undisclosed foreign assets or foreign income with an aggregate value of up to ₹1 crore.
The applicable tax and additional amount can together equal 60% of the relevant value, subject to the statutory rules.
For example, if an eligible undisclosed asset is valued at ₹50 lakh, the tax component at 30% would be ₹15 lakh, with an additional amount of ₹15 lakh. The total would be ₹30 lakh, assuming that valuation and all other requirements support this calculation.
This is a significant financial consideration. Taxpayers should establish which category applies before deciding how to proceed.
2. Foreign assets acquired using certain legitimate sources of funds
A different category covers qualifying foreign assets valued at up to ₹5 crore that were acquired from income earned while the taxpayer was a non-resident or from income already offered to tax in India, but were omitted from the applicable foreign asset schedule.
A fixed fee of ₹1 lakh applies to eligible declarations in this category, subject to the scheme’s conditions.
This distinction could be particularly relevant to people who worked abroad, accumulated savings, invested in overseas property and later returned to India.
However, the fact that an asset was purchased with legitimate funds does not automatically establish eligibility. The acquisition history, residential status, tax records and statutory requirements must be examined.
Three situations in which you should review your tax returns
You may want to examine your past filings if any of the following situations applies to you.
You returned to India after working abroad.
You may have accumulated bank deposits, property or investments while you were a non-resident. Your Indian reporting obligations can change when your residential status changes.
You own a property in Dubai or another foreign country.
Check whether the relevant foreign asset disclosures were made in your Indian tax returns. Also review any rental income or capital gains arising from the property.
You hold shares in a foreign company.
Employee stock awards, foreign brokerage accounts and overseas shareholdings can create reporting obligations that are easy to overlook, particularly when an employer administers the awards outside India.
These situations do not automatically mean that you have made a tax error. They are reasons to check whether your reporting matches the rules applicable to you.
What should you do before 31 December 2026?
If you have an overseas asset that may not have been reported correctly, start by gathering the facts rather than immediately filing a declaration.
- Check your residential status: Establish whether you were resident or non-resident for the relevant tax years.
- Identify your foreign assets: Include property, bank accounts, shares and other relevant holdings.
- Trace the source of funds: Keep purchase agreements, bank statements, inheritance records and evidence of previously taxed income.
- Review your past tax returns: Check the relevant foreign asset schedules and whether foreign income was properly reported.
- Assess your eligibility: Confirm whether the scheme applies to your circumstances, including its limits, exclusions, valuation rules and payment requirements.
A declaration under FAST-DS may provide specified protection from further assessment, penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, subject to the applicable statutory conditions. Taxpayers should confirm the precise scope of that protection before proceeding.
The real question is not where you own the asset
An overseas property may represent years of hard work and legitimate savings. A foreign bank account may have been opened while you were living abroad. Shares may have been granted by your employer as part of your compensation.
The important question is whether your Indian tax reporting reflects your actual circumstances.
With the FAST-DS deadline approaching, eligible taxpayers should use the remaining time to review their records and understand their options. Waiting until a discrepancy becomes a formal tax enquiry may leave less time to assess the position properly.
At Tax Panorama, we help individuals and businesses understand international tax obligations, including the reporting implications of overseas assets, foreign income and changes in residential status.
If you own assets abroad or have returned to India after living overseas, review your foreign asset disclosures before the 31 December 2026 deadline.
This article is for general information and does not constitute individual tax or legal advice. FAST-DS eligibility, payment requirements and available protections depend on the applicable legislation and official guidance.
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