Tax experts warn of stricter document verification, penalties, and new tax return forms starting April 2026.
Dubai: Indian expatriates living in the UAE are being advised to prepare their documents early for filing Income Tax Returns (ITR) for the 2025–26 financial year, as tax experts warn that delays could result in penalties, refund complications, and the loss of certain tax benefits.
The filing applies to Assessment Year 2026–27, with taxpayers expected to submit their returns before the July 31, 2026 deadline to avoid late fees and compliance-related issues.
The filing season also precedes broader changes to India’s tax documentation system from April 2026, when several commonly used income tax forms are set to be renumbered under the proposed Income-tax Rules, 2026.
Tax experts have warned that the transition could create confusion for overseas Indians unless documents and compliance records are organised well in advance. They added that many UAE-based Indians still underestimate the paperwork required for Indian tax filings, particularly those with investments, rental income, or other financial assets in India.
Documents to keep ready
“As the filing deadline approaches, taxpayers should begin organising financial documents early to ensure a smooth and timely filing process,” said Dixit Jain.
According to Jain, Indian expats should prepare:
- Bank statements for NRO, NRE, and resident accounts from April 1, 2025, to March 31, 2026
- Rental agreements and rent receipts
- Interest certificates for fixed deposits, FCNR deposits, and bonds
- Property ownership records and sale deeds
- Capital gains reports for shares, mutual funds, and property sales
- Home loan interest certificates for Section 24 deductions
- Investment proof under Sections 80C, 80D, and NPS
- Copies of Aadhaar, PAN, passport, visa, and Emirates ID
- Records of days spent in India during FY2025–26 and the previous four years
- Details of unlisted shareholdings, if applicable
Tax consultants say delays frequently occur because taxpayers struggle to compile capital gains statements, rental records, and overseas-linked financial documents close to the filing deadline.
New tax forms from April 2026
India’s tax compliance framework is also set for a major overhaul from April 2026 under the proposed Income-tax Rules, 2026, aimed at simplifying compliance procedures and improving digital processing.
Several commonly used tax forms in India are set to be renumbered under the proposed Income-tax Rules, 2026:
- Form 16 will become Form 130
- Form 26AS will become Form 168
- Forms 15G and 15H will become Form 121
- Form 15CA for foreign remittances will become Form 145
- Form 15CB will become Form 146
The proposed framework is designed to align tax reporting with automated systems such as Annual Information Statements (AIS), pre-filled tax returns, and digital compliance platforms.
Tax professionals say expatriates with overseas income, remittances, or foreign tax credit claims may need to pay closer attention to documentation requirements under the revised system.
Draft rules released for consultation also propose additional reporting requirements for certain non-residents, including Tax Identification Numbers (TINs), foreign remittance disclosures, and enhanced verification procedures.
Why timely filing matters
Dixit Jain said timely filing remains important even for expatriates who believe they may not owe any tax in India.
“Many taxpayers only realise the importance of filing after missing refund claims or losing the ability to carry forward losses,” he noted earlier.
According to Jain, filing returns after July 31, 2026, could attract penalties of up to Rs5,000 under Indian tax regulations. Tax experts also caution that excess Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) amounts can only be reclaimed through a properly filed income tax return.
They further noted that losses from shares or mutual funds generally cannot be carried forward unless declared within the filing deadline, which may affect future tax planning for investors actively trading Indian equities or mutual funds.
Residency checks becoming increasingly important
Tax professionals say residency calculations are becoming more significant for UAE-based Indians, as tax obligations in India can vary depending on the number of days spent in the country during a financial year.
Under Indian tax laws, residency status can affect how global income, foreign assets, and overseas earnings are assessed for taxation purposes.
Filed Income Tax Returns (ITRs) are also frequently required for home loan applications, visa processing, insurance claims, and investment-related financial verification in India.
Experts advise taxpayers with rental income, investments, or complex cross-border financial arrangements not to wait until the final weeks before the filing deadline, as document reconciliation and compliance reviews can take considerable time.
With millions of Indians living and working in the UAE, tax consultants expect another busy filing season as more expatriates seek guidance on evolving compliance requirements and updated tax reporting systems in India.
