The Indian Income Tax Department has initiated a comprehensive compliance campaign targeting expatriates residing in the UAE who maintain property holdings and financial assets abroad. Beginning November 28, 2025, thousands of Indian citizens will receive direct SMS and email notifications urging them to accurately declare all foreign assets in their tax returns by December 31, 2025, or face severe financial penalties.
This second phase of the Central Board of Direct Taxes’ (CBDT) ‘Nudge’ campaign leverages financial intelligence shared by over 100 jurisdictions through the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA). The department has identified approximately 25,000 high-risk taxpayers whose declared foreign assets in Assessment Year 2025-26 don’t align with data obtained through Automatic Exchange of Information mechanisms.
Notably, this initiative specifically excludes Non-Resident Indians (NRIs) who are not classified as Indian tax residents and consequently don’t file Income Tax Returns in India. These individuals remain exempt from foreign asset declaration requirements and won’t receive compliance alerts.
The financial consequences for non-compliance are substantial: a fixed penalty of ₹1 million (approximately Dh41,000) for failure to report assets, coupled with 30% taxation on any unreported income and potential penalties reaching 300% of the outstanding tax due.
Indian media reports indicate Dubai has emerged as a particular focus area following recent enforcement actions in Delhi, Mumbai, and Pune that uncovered millions in undisclosed assets linked to UAE holdings. This increased scrutiny coincides with India’s position as the leading source of foreign property investment in Dubai, accounting for 22% of all transactions in 2024 with estimated investments of Dh150 billion.
Tax professionals emphasize that enhanced information-sharing protocols between India and the UAE have created unprecedented transparency. Financial accounts, investment products, and business holdings in the Emirates now fall within clear visibility of Indian authorities through the CRS network.
The CBDT has additionally engaged corporate entities and professional organizations, including the Institute of Chartered Accountants of India, to broaden awareness about mandatory disclosure requirements. Many individuals may lack awareness of their obligations regarding offshore asset declarations.
Recipients of compliance alerts are advised to immediately access the Income Tax portal, meticulously review their returns for Assessment Year 2025-26, carefully examine Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income), and submit revised declarations before the December 31 deadline to avoid escalating penalties.