The Income-Tax Department is tracking Indians holding undeclared overseas real estate using global intelligence sharing. Taxpayers are encouraged to use the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS) to regularize these holdings and avoid heavy penalties under the Black Money Act.
The Income-Tax Department is intensifying its focus on Indian residents who own real estate abroad without declaring it in their tax filings. While past enforcement actions often prioritized liquid financial assets like overseas bank accounts and stock portfolios, authorities are now using spontaneous information exchange agreements to track ownership of tangible immovable properties across multiple jurisdictions.
This shift in enforcement uses intelligence that moves beyond automatic data-sharing protocols. By integrating global property data into internal audit systems, the tax department is identifying individuals who may have purchased foreign real estate—often under the Liberalized Remittance Scheme (LRS)—but failed to report these assets in the 'Foreign Assets' (Schedule FA) section of their Income Tax Return (ITR).
Understanding the Risks and Penalties
The scrutiny carries significant implications. Undeclared foreign assets are subject to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This legislation allows for heavy penalties and even criminal prosecution for non-disclosure. Beyond direct tax liability, investigators are examining the funding sources of these foreign acquisitions. If an asset was purchased using funds without a clear trail, it may trigger parallel inquiries under the Foreign Exchange Management Act (FEMA) or the Prevention of Money Laundering Act (PMLA). These investigations can continue even if the tax liability related to the asset is eventually settled.
The Role of the FAST-DS Scheme
To help taxpayers correct past non-compliance, the government introduced the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS) in August 2026. This window allows individuals to voluntarily disclose previously unreported foreign assets, including real estate, stocks, and employee stock options (ESOPs). For assets up to ₹1 crore, the scheme involves a one-time payment of a 60% tax and penalty. For assets up to ₹5 crore acquired through funds that have already been subjected to income tax, specific options for regularization exist. Successful disclosure under this scheme generally provides immunity from prosecution under the Black Money Act.
Despite the amnesty-like nature of the scheme, uptake has been slow. Tax experts and market observers attribute this to the practical difficulties of determining the current valuation of old foreign properties and the strict caps on the value of assets eligible for the scheme. Many taxpayers are finding that the complexity of valuing assets in foreign currency and the potential tax outflow create hurdles for participation.
Taxpayers who own property abroad may need to review their past ITR filings to ensure compliance. The next critical step for those with concerns is consulting with tax advisors to verify whether their overseas assets have been correctly reported in Schedule FA or if they fall under the eligibility criteria for the FAST-DS window before the department initiates formal outreach.