On 26 October 2026, Business Standard and Business Today reported that the Income Tax Department had started contacting taxpayers who own homes or commercial property in the UAE that may be missing from their returns. The message was to use the one-time disclosure window under FAST-DS 2026 before it closes on 31 December. For advisors, it raises a question many families have never asked, which is how the Black Money Act treats a flat, villa or office that a client owns abroad.
The answer is that property sits in the harshest corner of the law, and it is also the asset the department's new data tool is least likely to show. Since July 2026, clients can see foreign account data in their Annual Information Statement (AIS), but that data comes from banks and other financial institutions abroad. A clean AIS can therefore give false comfort to a client who owns land or a building overseas. Advisors who check property by hand now, and rebuild the remittance trail with the records described in our guide to TCS on foreign remittance, can settle each client's position while the cheaper route is still open.
What the department told UAE property owners
The scheme took effect on 16 August 2026, and about 1,100 declarations had been filed by 26 October, according to finance ministry sources cited by Business Standard. At a meeting on 23 October, officials agreed to share more of the foreign asset information the department holds with taxpayers where possible.
Business Today added a detail that advisors should not miss. The portal shows only data from partners in the Common Reporting Standard (CRS) and the US FATCA framework, while intelligence from other sources is held but not displayed. In other words, the department may know about a property even when nothing appears on the client's screen.
Why AIS does not show a client's foreign property
The CBDT's note on displaying CRS and FATCA information in AIS says the data covers foreign bank and custodial accounts, certain financial investments and income such as interest and dividends. It covers calendar years 2022 to 2024, with 2025 data expected in September or October 2026. The note also says the data is not a complete or exhaustive record. Taxpayers must report all foreign assets in Schedule FA whether or not they appear in AIS.
A property in the client's own name is not a financial account, so it falls outside that list. A client who sees only an old savings account in AIS may assume the department's picture of their holdings is small, when it may be larger than the one displayed. Schedule FA, the part of the return where residents list foreign assets, also has its own section for immovable property located outside India.
How the Black Money Act treats foreign property differently
Under Section 43 of the Black Money Act, a resident who files a return but leaves out a foreign asset can face a penalty of ₹10 lakh, and Section 42 sets the same amount where a required return is not filed. Since 1 October 2024, when the Finance (No. 2) Act, 2024 substituted the proviso, these penalties do not apply where the aggregate value of the assets is ₹20 lakh or less. That relief covers assets other than immovable property. A foreign apartment worth ₹15 lakh therefore gets no protection from a threshold that would cover a brokerage account of the same value.
The same line runs through prosecution. A CBDT instruction dated 18 August 2025 says prosecution under Sections 49 and 50 will not begin where the penalty under Sections 42 and 43 is not imposable within the ₹20 lakh limit. Property sits outside that limit, and Sections 49 and 50 carry rigorous imprisonment of six months to seven years for wilful failures, so an unreported property is more than a paperwork issue.
The tax side is heavier still where the money behind the property was never taxed in India. The Act taxes an undisclosed foreign asset at 30 per cent of its value in the year it comes to the tax officer's notice, and Section 41 allows a penalty of three times that tax. For example, a property valued at ₹80 lakh and found outside the scheme would face tax of ₹24 lakh and a possible penalty of ₹72 lakh, a total of ₹96 lakh that exceeds the property's value.
What FAST-DS 2026 costs for a property declared now
The Income Tax Department's FAQs on FAST-DS 2026 set out two routes. Category 1 covers undisclosed foreign assets or income up to ₹1 crore in aggregate, which pay tax of 30 per cent plus an equal additional amount, or 60 per cent of value in all. Category 2 covers assets bought from taxed income or during non-resident years but left out of Schedule FA, up to ₹5 crore, for a flat fee of ₹1 lakh. A valid declaration gives immunity from further tax, penalty and prosecution under the Black Money Act for the items declared.
For the same ₹80 lakh property, a client whose purchase money was never taxed would pay ₹48 lakh under Category 1. A client who bought it with tax-paid money sent under the Liberalised Remittance Scheme but left it out of Schedule FA would pay ₹1 lakh under Category 2. The difference rests on the paper trail, because bank remittance records, Form 15CA filings (Form 145 from 1 April 2026) and TCS certificates are often what prove the money was taxed before it left India.
Valuation needs equal care. The FAQs say foreign immovable property is valued at the higher of its cost and its open market price on 31 March 2026, preferably on a report from a valuer recognised in the property's country, with indexed cost used where no valuation is done. A property bought years ago may now be worth more than it cost, which can push a client past the ₹1 crore limit. The wider sorting of clients into categories is covered in our piece on the three foreign asset gaps advisors will find under FAST-DS 2026.
What the tribunal said about honest mistakes
In October 2025, a special bench of the Income Tax Appellate Tribunal in Mumbai held that the ₹10 lakh penalty is discretionary rather than automatic, according to an EY tax alert on the ruling. The case involved tax-paid money sent abroad under LRS into an overseas fund, left out of the return by oversight and disclosed in later years before any notice. Even so, the taxpayer had to show the mistake was genuine, and the case concerned a fund, not property. Advisors should treat it as a defence to argue, not a reason to wait.
What advisors should do before 31 December
The first step is to ask every resident client directly about property abroad, including property held jointly, inherited, or bought by a relative with money the client sent, because the AIS will not answer that question. Where family members have funded each other's remittances, the client's CA should also consider the clubbing of income and gift tax questions before deciding whose return the property belongs in.
- List each foreign property with its owners, purchase date and source of money, and match every payment to bank remittance records and TCS certificates.
- Obtain a valuation as on 31 March 2026, preferably from a valuer recognised in the property's country, and compare it with the ₹1 crore and ₹5 crore limits.
- Check each past return for a Schedule FA entry, and decide with the client's CA whether the property belongs in Category 1, Category 2 or neither.
- File any declaration well before 31 December 2026, and make sure every return filed from now on reports the property in Schedule FA.
The same discipline applies to clients who invest in US commercial real estate. Offshore investors on Raveum, for example, invest through a US corporation, known as a blocker, that holds the property interest, so the client owns shares in that corporation rather than the building, as our guide to US commercial real estate investment for advisors explains. Advisors who introduce eligible clients through Raveum's partner page will find that clear records of each remittance make the CA's Schedule FA review faster. Any such investment also carries risk, including loss of capital, illiquidity, falling property values and currency movements.
The UAE outreach names one country, but its lesson is general. The department shows clients their foreign accounts, keeps back what it learns elsewhere, and works under a law that gives property no small-value relief. For a client who owns a home or office abroad, the prudent working assumption is that the department already knows or soon will, which makes the weeks left in FAST-DS the cheapest moment to put the record right. Advisors who rebuild the remittance trail now, with the help of our guide to TCS on foreign remittance, will be able to show which category each client falls into rather than guess.
Frequently asked questions
What is the penalty under the Black Money Act for not disclosing foreign property?
A resident who files a return but leaves out foreign property can face a penalty of ₹10 lakh under Section 43 of the Black Money Act. If the property was bought with income never taxed in India, the Act also charges tax at 30 per cent of its value and allows a further penalty of three times that tax.
Does foreign property appear in the Annual Information Statement?
Usually not. The foreign asset data in AIS comes from banks and other financial institutions under CRS and FATCA, and covers accounts, financial investments and income such as interest and dividends. Property held in a client's own name is not a financial account, so a clean AIS does not show that the client has nothing to report.
Is there a small-value exemption for foreign assets under the Black Money Act?
Yes, but not for property. Since 1 October 2024, the ₹10 lakh penalties under Sections 42 and 43 do not apply where foreign assets other than immovable property are worth ₹20 lakh or less in aggregate. A foreign flat of any value stays exposed to the penalty if it is left out of Schedule FA.
How is foreign property valued under FAST-DS 2026?
The Income Tax Department's FAQs say foreign immovable property is valued at the higher of its cost and its open market price on 31 March 2026. A report from a valuer recognised in the country where the property sits is preferred. Where no valuation is done, the indexed cost of the property is used instead.
Can a client who bought property abroad with taxed money still face a penalty?
Yes. Paying tax on the money does not remove the duty to list the property in Schedule FA, and the ₹10 lakh penalty under Section 43 can apply to the omission. A special bench of the Mumbai tribunal held in October 2025 that the penalty is discretionary, but the taxpayer must prove the mistake was genuine.
What happens if a client misses the FAST-DS deadline of 31 December 2026?
After 31 December 2026, the scheme's fixed charge of 60 per cent and its ₹1 lakh fee are no longer available. A property found later can be taxed at 30 per cent of its value, with a possible penalty of three times that tax, and wilful omissions can lead to prosecution. Declaring also carries risk, because a declaration is final.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
