Many Keralites bought apartments in Dubai while working in the Gulf. That is perfectly legal. The issue arises when the owner becomes a resident of India and the property, its rent or its sale is not reported in the Indian return. The department now receives information on foreign assets through international exchange, and notices follow.
Led by Regi Tom Antony, FCA, MBA (Australia), ACMA (UK), CGMA (USA), CISA (USA), former Group CFO/COO (OSRAM/Siemens, Westcon Group; Middle East & Africa).
Owning property in Dubai creates no Indian tax issue while you are a non-resident. Once you become resident and ordinarily resident in India, you must report the property in the foreign assets schedule of your Indian income tax return every year, and pay Indian tax on rent from it and on gains when you sell it, with credit for any foreign tax. Returning NRIs who qualify as resident but not ordinarily resident (RNOR) are generally outside the foreign assets reporting and are not taxed on foreign income unless it arises from a business controlled in India. Notices are issued when the department receives information about foreign property held by a resident whose return does not show it. Failure to disclose can attract the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, with tax at 30% of the asset value if it was acquired from undisclosed income, a penalty of three times that tax, and a ₹10 lakh penalty for not reporting it. Under FEMA, property acquired while you were an NRI can continue to be held after you return.
It depends on your residential status for the year:
| STATUS | REPORT IN INDIA? | INDIAN TAX ON RENT AND SALE? |
|---|---|---|
| NRI | No | No, foreign income is not taxed in India |
| Resident but not ordinarily resident (RNOR) | Generally no foreign assets reporting | Generally no, unless the income arises from a business controlled in India |
| Resident and ordinarily resident | Yes, every year, in the foreign assets schedule | Yes, with credit for foreign tax under the DTAA (Form 44, earlier Form 67) |
Returning NRIs usually get two or three RNOR years. Plan before the first resident and ordinarily resident year: the NRI Come Back Plan · the 120-day rule.
For failing to report a foreign asset in the return of a year in which you were resident and ordinarily resident.
If the asset is treated as acquired from income not disclosed in India, plus a penalty of three times that tax.
Property bought from income earned abroad while you were a non-resident was never taxable in India. The defence is evidence.
General information as at November 2026. See the Income Tax Department for the Act and rules.
Yes. Under section 6(4) of FEMA, a person resident in India may hold, own and transfer foreign property acquired while a non-resident, and keep the income from it abroad. Buying new property abroad once resident needs the liberalised remittance scheme route. The tax reporting still applies.
Regi's advice: “If a tax notice arises, don't panic. Engage a CA experienced in NRI matters to handle it.”
Share the notice and when you returned to India. We will work out your status for each year, what had to be reported and how to reply.