Daijiworld Media Network - Mumbai (MS)

Mumbai, Oct 19: As per reliable sources, the Income Tax (IT) department will investigate the source of funds that were used by nearly 7500 Indians who own plush properties in Dubai.

It is completely legal for Indian nationals to own properties abroad as per the Foreign Exchange Management Act of 1999. However, the IT department will be mainly focusing on the source of finance for such investments. It is learnt that data of these Indian investors who have invested in real estate in Dubai is with the Intelligence and Criminal Investigation (I&CI) wing of the IT department. In addition, the IT department will be investing the angle of declaration of the same to the tax department.

As per the Dubai Land Development department, in the first quarter of 2018, there have been 1550 real estate transactions by Indians in Dubai in which a staggering AED 3 billion was invested by 1387 Indians. In 2017, an amount of AED 15.6 billion was pushed into real estate by Indian investors. The five years data between 2013 and 2017 says that Indians have invested in properties worth AED 83.65 billion in the city.

While it is not a crime for an Indian to invest in properties and securities abroad, a resident individual can invest up to $2,50,000 a year only under the Reserve Bank of India's (RBI's) liberalized remittance route. However, it is mandatory for such investors to show these investments, which they hold in foreign land in their IT returns under FA (Foreign Assets) Schedule since the financial year of 2011-12. If the same is not disclosed during IT return filing, it calls for tax and penalty as per the stringent Black Money (undisclosed foreign income and assets) Imposition of Tax Act (Black Money Act) of 2015.

Undisclosed foreign income and asset is taxed at a rate of 30% under the Black Money Act. In addition, there is provision in the law to slap a fine of 300% of the tax amount along with criminal prosecution. According to a report, at least 29 Indians, who were inquired by different agencies in India for alleged financial crimes and links to offshore entities figure on a global database of those connected to properties in over 20 prime real estate projects in Dubai.

The Indians form a major chunk with 5800 entries out of the possible 129,000 entries in the database of Dubai which are linked to properties in prime locations like the Palm Jumeirah, The World, Motor City, Emirates Living, Dubai Marina and Old Town Island.