Schedule FA: Why UAE NRIs Are Getting Income Tax Notices — and What to Do
UAE-based NRIs do not need to file Schedule FA. But thousands are receiving notices because they filed as Resident by mistake, or kept a resident savings account. Here is how to fix it.
Quick answer: Schedule FA — foreign asset disclosure in your Indian ITR — applies only to Resident and Ordinarily Resident Indians. UAE-based NRIs are exempt as long as they correctly file as non-resident. Most notices result from filing errors: using ITR-1 as an NRI, filing as Resident by mistake, or keeping a resident savings account after moving to the UAE.
₹10L
Penalty per year for non-disclosure (Black Money Act)
100+
Countries sharing financial data with India via CRS
ITR-2
Correct form for NRIs — not ITR-1
Dec 31
Valuation date for foreign assets in Schedule FA
Who Must File Schedule FA — and Who Does Not
NRI (Non-Resident Indian)
NOT requiredNRIs living and working abroad are exempt from Schedule FA. Your UAE bank account, investments, and property abroad are yours to hold without Indian disclosure — provided you correctly file as non-resident in your ITR.
RNOR (Resident but Not Ordinarily Resident)
NOT required (generally)RNOR is a transitional status lasting 2 to 3 years after returning to India. Foreign income remains largely exempt. Schedule FA is generally not required for RNOR, though this depends on your specific circumstances. Confirm with a CA.
ROR (Resident and Ordinarily Resident)
MANDATORYOnce you become ROR — typically after spending 182+ days in India in a financial year and meeting the 10-year preceding year test — Schedule FA is mandatory. Every foreign bank account, investment, and property must be disclosed, even if it generates no income.
What Must Be Disclosed in Schedule FA (for Returning NRIs Who Become ROR)
If you return to India permanently and become ROR, the following must be disclosed in Schedule FA for each year you are ROR. Valuation date is December 31 of the calendar year — not the Indian financial year end of March 31.
Why UAE NRIs Are Getting Notices — and the Fix
Common cause
Filed ITR as Resident by mistake
The fix
Check day count: 182+ days in India means Resident. Below 182 days means NRI. File as NRI using ITR-2. If past returns used ITR-1 or filed as Resident incorrectly, file a revised return.
Common cause
Kept a resident savings account after leaving India
The fix
Resident savings accounts must be converted to NRO within a reasonable time after becoming an NRI. CRS data shows an active resident account. The tax system assumes you are Resident and sends Schedule FA notices.
Common cause
CRS data mismatch with ITR
The fix
India receives financial data from 100+ countries including the UAE. Your UAE bank account balance, Emirates NBD FD, investment account — all visible to CBDT. If your ITR does not match, an automated notice is issued.
Common cause
Did not file ITR at all
The fix
Even if you owe no Indian tax, filing an ITR confirming non-resident status closes the loop for the tax department. It prevents the FAIU (Foreign Assets Investigation Unit) from issuing a summons to verify your status.
Penalties Under the Black Money Act
Source: Black Money Act 2015, Section 42 and 43. Finance Bill 2026 introduced INR 20 lakh exemption for non-property foreign assets for small taxpayers.
Frequently Asked Questions
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Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Tax laws are complex and change frequently. Consult a qualified chartered accountant or NRI tax specialist for advice specific to your situation. Valura is regulated by the CMA. Custody provided by First Abu Dhabi Bank (FAB).
