Indian tax on Dubai property: rent, capital gains, Schedule FA and the Black Money Act

Owning a home in Dubai does not take it outside Indian tax. A resident and ordinarily resident Indian is taxed on worldwide income, so the rent is taxable in India, a gain on sale is a capital gain in India, and the property must be reported in your return every year. The UAE does not tax individuals on rent or gains, which means there is normally nothing to offset: the Indian tax is the whole tax. This guide sets out the rules as published by the Income Tax Department and the CBDT, checked on 12 November 2026. It is general information, not tax advice; a chartered accountant should confirm how it applies to you.

A note on section numbers. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Bank and government pages now cite new section numbers alongside the old ones, and some articles still use only the old. Where this guide names a section, it says which Act it belongs to. The Black Money Act of 2015 is a separate law and keeps its numbering.

Indian tax on a Dubai property at a glance

Who is taxed on Dubai property?

Your residential status for the year decides it, not your passport or a UAE visa. The Income Tax Department's guide to residential status explains the three categories: a resident and ordinarily resident individual is taxed on income from anywhere in the world; a resident but not ordinarily resident individual and a non-resident are, broadly, taxed only on income that arises or is received in India.

So an Indian professional living in Mumbai who buys a Dubai apartment is taxed in India on its rent. A person who has moved to Dubai and become non-resident in India generally is not, though the rules on when residence changes are detailed and depend on days spent in India in the year and in earlier years. Check your status every year before relying on it.

Rental income from a Dubai property

Rent from a Dubai property is taxed in India in the same way as rent from a property in India, after the deductions allowed for house property, and added to your other income at your slab rate. Report it in Schedule FSI as foreign-source income, converting dirhams to rupees.

Costs you pay in Dubai, such as service charges, are worth keeping records of: your chartered accountant will advise which can be set against the rent under the house property rules, and the answer is not always the same as for a UK or US landlord.

Worked example. An apartment is let for AED 90,000 a year, which is ₹23.0 lakh at ₹25.56 per dirham. For a taxpayer in the highest slab, the Indian tax on that rent after deductions is a significant share of the gross yield. A 7% gross yield in Dubai is not a 7% return to an Indian resident; work out your net figure with your accountant and with our rental yield calculator.

Capital gains when you sell

Long-term or short-term?

Since the Finance (No. 2) Act, 2024 there are two holding periods: 12 months for listed securities and 24 months for all other assets, including land and buildings in India or abroad. Hold a Dubai property for more than 24 months and the gain is long-term.

For an off-plan purchase, take advice on when the holding period starts: you contract to buy years before the building exists and the title deed is issued on completion.

The rate

For transfers on or after 23 July 2024 the long-term rate is 12.5%, and the indexation benefit was removed: the original cost of acquisition and improvement is deducted, not an inflation-adjusted cost. The Income Tax Department notes a grandfathering rule for resident individuals and Hindu Undivided Families: for land or buildings acquired before 23 July 2024, the gain can be computed with indexation and taxed at 20%, where that gives less tax. The ITR-2 validation rules for the 2026-27 assessment year apply the same split.

Worked example

A resident individual bought a Dubai apartment in 2025 for AED 1,000,000 plus AED 41,020 in Land Department fees, and sells in 2028 for AED 1,250,000. Assume, for illustration only, that the rupee is at ₹25.56 per dirham on both dates.

• Cost: AED 1,041,020, or ₹2.66 crore.
• Proceeds: AED 1,250,000, or ₹3.19 crore.
• Gain: about ₹53.4 lakh. At 12.5%, the tax is about ₹6.7 lakh, before any surcharge and cess.

In practice the rupee rate will differ between the dates, and how foreign-currency amounts are converted for an Indian resident follows the Indian rules, which a chartered accountant should apply. Because the purchase was after 23 July 2024, the 20% indexation option is not available.

Reporting: Schedule FA and the Black Money Act

What to report. A resident must list foreign assets in Schedule FA of the income tax return, including immovable property outside India, and foreign income in Schedule FSI. A CBDT press release of November 2024 describes Schedule FA and FSI reporting as mandatory and cites the Black Money Act's requirement for full disclosure.

The penalty. Under section 42 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, a person who holds a foreign asset and does not report it can be charged a penalty of ₹10 lakh. Section 43 imposes the same amount for failing to furnish information or furnishing inaccurate particulars. An exemption covers non-immovable foreign assets with an aggregate value of up to ₹20 lakh, but it expressly excludes immovable property: a Dubai flat is within the penalty whatever it is worth.

Enforcement is active. The CBDT's first NUDGE campaign in November 2024 contacted taxpayers whose foreign holdings were not in their returns, and a second campaign in November 2025 asked identified taxpayers to revise their returns by 31 December 2025. The Budget speech of 1 February 2026 proposed a one-time disclosure window for small taxpayers with non-immovable foreign assets; we have not confirmed whether it was enacted, and as described it would not apply to property.

TCS when you buy

The 20% TCS collected on LRS remittances above ₹10 lakh a year is not a tax on the property. It is collected against your PAN and, as Kotak Mahindra Bank's guidance states, the remitter can claim credit for it when filing the return. Keep every TCS certificate from your bank. How the LRS and TCS shape a purchase is covered in buying Dubai property from India.

What the UAE taxes, for comparison

PwC's summary of UAE personal taxes, reviewed on 9 September 2026, confirms that the UAE has no federal or emirate-level personal income tax. An individual pays no UAE tax on rent or on a gain from a Dubai home. Property costs in the UAE are transaction and occupancy charges, such as the 4% Land Department fee and service charges, covered in the UAE property tax guide.

Records to keep

• The sale and purchase agreement, the Oqood or title deed, and the DLD fee receipt.
• Each LRS remittance: Form A2, the bank's debit advice and TCS certificates.
• Tenancy contracts, rent received and service charge invoices.
• The exchange rate used for each amount you report.
• On sale: the sale agreement, the transfer documents and the agent's invoice.

If you want help comparing a Dubai rental yield after Indian tax against an investment at home, speak to an adviser, and take your final figures to a chartered accountant.