India–UAE DTAA 2025: NRIs, Remittances, and Tax Rules Explained

(DUBAI (UAE)) Indian expatriates across the Gulf woke up to a familiar but newly urgent reminder this week: the India–UAE DTAA remains the main shield that keeps their UAE earnings from being taxed again back home, and the 2025 filing season will test how carefully NRIs in Gulf states document their status. As the UAE continues issuing individual Tax Residency Certificates (TRCs) and India’s residency thresholds remain steady, tax advisers in Dubai say the treaty’s protections still work—provided people keep clean records, track their days in India, and claim benefits properly.

Treaty purpose and practical effect

The India–UAE DTAA, signed on 29 April 1992 and in force since 22 September 1993, with a protocol update in 2007 to align with OECD standards, aims to:

• Prevent the same income from being taxed twice.
• Support trade, investment, and cross-border jobs.

In practical terms:
– A UAE salary generally remains outside India’s income-tax net for those who qualify as non-residents under Indian law.
– This distinction is possible because the UAE does not levy personal income tax, while India taxes global income only for residents.
– For NRIs in Gulf hubs like Dubai and Abu Dhabi, that difference is the heart of Double Taxation Avoidance.

Residency test and everyday risks

Under India’s rules, non-resident status generally hinges on spending less than 182 days in India during the financial year. If an NRI crosses that threshold, global income—including a UAE paycheck—becomes taxable in India.

Common risk factors:
– Frequent travel
– Extended family stays
– Unplanned medical trips

Tax planners therefore stress:
– Yearly tracking of days in India
– Maintaining documentary evidence
– Special care for people who split projects between countries

Business profits, permanent establishment and special sectors

The treaty’s protections go beyond wages.

• Article 7: Business profits are taxed in the country of residence unless there is a permanent establishment (PE) in the other country—typically a fixed place of business or a dependent agent who can bind the company.
  • A UAE-based consultancy owned by an NRI isn’t taxed in India unless it effectively operates from India.
• Article 8: Shipping and airline income receive special handling, protecting UAE-based carriers when they earn across borders.

These provisions guide auditors and provide long-standing clarity for cross-border earnings.

Investment income and capital gains

Investment flows are central to the India–UAE relationship. The DTAA specifies how returns are taxed:

• Articles 10–12: Set lower withholding rates on Indian-source dividends, interest, and royalties paid to UAE residents—often in the 10–12.5% range.
• Article 13: Most capital gains on shares or real property are taxed where the asset is located—so sales of Indian property or Indian equities are taxed in India.
• Article 24: Allows a credit or exemption method to eliminate double taxation when overlaps occur.

For NRIs splitting portfolios between markets, the treaty ensures UAE authorities don’t tax Indian gains again while providing relief mechanisms.

Tax Residency Certificate (TRC): paperwork and process

The TRC is the key document that makes treaty benefits actionable.

• Since the UAE corporate tax launch in 2023, a more formal residency framework has developed.
• Common individual thresholds used by UAE authorities:
  • 183 days of presence, or
  • Evidence of a permanent home, or
  • An employment contract.
• UAE residents can apply for TRCs via the UAE Ministry of Finance, the definitive government portal for treaty-residency documentation.
• Indian banks, brokers, and payers request the TRC to apply reduced withholding or confirm treaty protection.

Withholding, refunds and practical filing tips

In practice, Indian payers often deduct tax at source assuming no treaty relief. The clearance process typically involves documentation and, if needed, a refund claim with Indian authorities.

Advisers recommend:
1. File the TRC on record before payouts begin.
2. Keep careful records of remittances and their sources.
3. Understand that sending money from a UAE salary into Indian accounts is a transfer, not a taxable event by itself—but interest earned depends on residential status and account type (NRE vs NRO).

This nuance matters for families using accounts for school fees, medical bills, or home loans.

Scale and economic impact

• The UAE hosts more than 3.6 million Indian citizens (community estimates commonly cited by both governments), the largest Indian diaspora abroad.
• Remittances from the UAE and wider Gulf have topped ₹3 lakh crore in recent years.
• For these households, the DTAA reduces disputes and often lowers tax withheld on Indian dividends and interest.

Analysis by VisaVerge.com suggests the treaty’s structure—especially for investment income and shipping—has reduced cross-border hassles, but its value depends on consistent, documented residency.

Limits, carve-outs and business structuring

The DTAA is not a blanket exemption.

• Indian rental income or gains from selling Indian assets remain taxable in India.
• The treaty prevents double taxation but does not shift primary taxing rights away from India for India-sited assets.
• If a UAE-based business is effectively run from India through a dependent agent or fixed place of business, Article 7 exposes those profits to Indian tax.

Many small firms respond by:
– Separating invoicing and staffing across countries
– Creating clearer contracts and audit trails

Everyday examples that illustrate the rules

• A Dubai engineer who spends 150 days in India to care for a parent and returns for a month-long wedding risks crossing the residency threshold.
• A trader holding shares through an Indian broker must plan for Indian capital-gains tax—timing and rate depend on asset type and holding period.
• A freelance designer on a UAE residence visa who takes ongoing Indian-client work should check if a pattern of contracts and meetings constitutes a permanent establishment.

In each case, the treaty provides the framework, but personal calendars, contracts, and bank trails determine the outcome.

Data exchange, compliance and best practice

Compliance has tightened with global standards like FATCA and CRS—Gulf banking is no longer a privacy wall.

• If NRIs omit Indian assets while claiming non-resident status, information exchanges can reveal discrepancies.
• Tax professionals advise:
  • Disclose Indian income in India when due.
  • Claim treaty relief with supporting documentation.
  • Keep TRCs current.

This approach reduces penalty risk and avoids lengthy back-and-forth with tax officers who now expect stronger paperwork.

Important: If an NRI fails to produce a valid UAE TRC, Indian payers can refuse reduced withholding and deduct tax at standard rates. Those funds may be recoverable, but refunds can cause cash-flow strain.

Social security, retirement and the missing SSA

There is currently no bilateral Social Security Agreement (SSA) between India and the UAE, despite periodic talks tied to CEPA reviews.

• Private-sector Indians in the UAE rely on the gratuity system for end-of-service benefits.
• Workers who contributed to the EPFO in India often consider account portability on return.
• As of November 2025, officials have not signed a pact to make contributions transferable across borders.

The absence of an SSA does not affect the DTAA directly, but it matters for retirement planning and timing decisions about moving savings home.

Treaty articles — quick reference

• Article 4: Defines who counts as a resident—the starting point for tax rights.
• Article 7: Covers business profits and the permanent establishment test.
• Articles 10–12: Deal with dividends, interest, and royalties.
• Article 13: Sets capital-gains rules tied to where the asset sits.
• Article 24: Explains how each country eliminates double taxation—often via credits.

These tools have helped NRIs navigate two tax systems for more than three decades.

Practical checklist and final advice

Tax advisers give consistent guidance:

• Plan travel days carefully to avoid unintended residency.
• Keep contracts and invoices clean and clearly allocate services by country.
• Separate business receipts from personal remittances and document sources.
• Store TRCs and residency documents where payers and brokers can access them.
• Renew KYC/residency proofs with Indian banks and brokerages early in the year.

The treaty can only help those who can show they qualify. For many families, maintaining clear records is now part of living and working between two economies that demand documentation—and provide tax certainty in return.