Gulf NRIs and Indian tax
NRIs in the UAE and Gulf: India Tax Residency, TRC and DTAA
The UAE and most Gulf countries do not tax personal income. That is exactly why Indian tax law treats Gulf-based NRIs a little differently. This guide explains deemed residency, the 120-day rule, the UAE Tax Residency Certificate and how the India-UAE treaty reduces tax on your Indian income.
Quick summary
Living in a zero-tax country does not end Indian tax questions.
An NRI in the UAE or Gulf is generally taxed in India only on Indian income, such as NRO interest, rent from Indian property, dividends and capital gains on Indian assets. Salary earned in the Gulf stays outside Indian tax for a non-resident.
Two rules change that picture for higher earners. If your Indian income exceeds ₹15 lakh and you are not liable to tax in any other country, India can treat you as a deemed resident. And above the same ₹15 lakh, the number of days you can spend in India before becoming resident can drop from 182 to 120.
On the other side, the India-UAE tax treaty can cut Indian tax on NRO interest to a maximum of 12.5% and on Indian dividends to 10%, but only with a UAE Tax Residency Certificate and Form 10F in place.
The starting point
Why living in the UAE or Gulf changes the question
Most countries tax their residents on their income, so an Indian who moves to the UK, US or Canada becomes taxable there and is, in tax terms, clearly resident somewhere else. The UAE, Saudi Arabia, Qatar, Kuwait and Bahrain do not levy personal income tax on individuals, and Oman will only start taxing high earners from 2028.
Indian law was concerned that an Indian citizen could earn substantial income in India while being taxed as a resident nowhere in the world. The deemed residency rule, introduced in 2020 and carried into the Income-tax Act, 2025, is aimed at exactly that situation. That makes it far more relevant to Gulf-based NRIs than to NRIs in most other countries.
For the general rules on how residential status is worked out each year, read our guide to wrong residential status in an NRI ITR. This guide focuses on what is specific to living in a zero-tax country.
The ₹15 lakh rule
Deemed residency: when India treats you as resident without a visit
An Indian citizen is treated as a deemed resident of India for a year when all three conditions are met:
- the person is an Indian citizen (OCI cardholders and foreign citizens of Indian origin are not covered by this particular rule);
- their total income other than income from foreign sources exceeds ₹15 lakh in the year, which usually means Indian rent, NRO interest, Indian dividends and capital gains on Indian property, shares or mutual funds; and
- they are not liable to tax in any other country or territory because of domicile, residence or a similar criterion.
Days spent in India do not matter for this rule. A UAE-based Indian who sells a flat in India and makes a large capital gain in one year can cross the ₹15 lakh line without setting foot in the country.
Tax residency and FEMA residency are separate tests. Being a deemed resident for income tax does not by itself change your status for bank accounts under FEMA, which looks at where you actually live and why. Your bank should still be told about any genuine change in where you live.
The difficult part
Does a UAE Tax Residency Certificate protect you from deemed residency?
The third condition asks whether you are liable to tax in another country. Being liable to tax does not require tax to have actually been paid; it asks whether a tax liability exists under that country's law. Because the UAE does not levy personal income tax on individuals, many UAE residents may not meet that test, even though they genuinely live there.
A UAE Tax Residency Certificate proves that you are resident in the UAE, and it is essential for claiming treaty rates. Whether it also takes you outside the deemed residency rule is a debated, fact-specific point, and different advisers take different positions. If your Indian income is likely to exceed ₹15 lakh in a year, for example because of a property sale, get the position reviewed before filing rather than assuming either way.
Visiting India
The 120-day rule for Gulf NRIs with higher Indian income
For most NRIs visiting India, the key number is 182 days: stay that long in a year and you become resident. For an Indian citizen or person of Indian origin whose income other than foreign-source income exceeds ₹15 lakh, there is a second test: 120 days or more in the year, combined with 365 days or more in the four preceding years, can also make you resident. A person who becomes resident under this rule is generally RNOR rather than fully resident.
Gulf NRIs often spend long periods in India, especially around family events, so this rule is worth tracking alongside your Indian income. Keep an accurate travel log or an official entry and exit record every year.
UAE paperwork
The UAE Tax Residency Certificate
The UAE Tax Residency Certificate (TRC) is issued by the Federal Tax Authority through its EmaraTax portal. It is the document Indian banks, payers and the tax department rely on to accept that you are a UAE resident for treaty purposes.
Individuals generally qualify for UAE tax residency in one of these ways:
- 183 days: physically present in the UAE for at least 183 days in a 12-month period; or
- 90 days with ties: at least 90 days in the UAE, together with UAE or GCC nationality or a valid UAE residence permit, and either a permanent home or employment or business in the UAE.
There is an important difference between UAE domestic residency and treaty residency. The India-UAE treaty treats an individual as a UAE resident if they are present in the UAE for at least 183 days in the calendar year concerned. Someone who qualifies for a UAE certificate under the 90-day route may not meet the treaty's own test, so check which test your certificate is based on before relying on it in India.
Apply once you meet the residency test for the period you need, and renew it for each year. Indian banks usually ask for a fresh certificate every financial year.
The India-UAE tax treaty in practice
For a UAE treaty resident with a valid TRC and Form 10F, the treaty caps the tax India can charge on several common types of Indian income:
| Indian income | Usual treatment for a UAE resident |
|---|---|
| NRO savings and fixed deposit interest | Treaty cap of 12.5% (5% where the recipient is a bank), instead of 30% plus surcharge and cess. Needs TRC and Form 10F. |
| Dividends from Indian companies | Treaty cap of 10%, instead of the higher domestic rate. |
| NRE account interest | Already exempt in India for a non-resident, so the treaty is not needed. |
| Rent from Indian property | Taxable in India under domestic law; the treaty does not reduce it. |
| Capital gains on Indian property | Taxable in India. Buyer TDS still applies; see our capital gains guide. |
| Salary for work done in the UAE | Not taxed in India for a non-resident. |
To get the treaty rate at source, give your Indian bank or the paying company your UAE TRC and file Form 10F on the income tax portal, ideally before the interest or dividend is paid. If tax has already been deducted at the full rate, the excess can usually be claimed back through your Indian return. For the general treaty rules, including what happens when two countries both treat you as resident, see our guide to DTAA tie-breaker rules.
Across the GCC
Saudi Arabia, Qatar, Kuwait, Oman and Bahrain
The same zero-tax issue applies across most of the Gulf. India has a tax treaty with each GCC country, but treaty rates and residence tests differ, so the treaty for your country must be checked rather than assuming it matches the UAE.
| Country | Personal income tax on salary | What to note |
|---|---|---|
| UAE | None | TRC through the Federal Tax Authority (EmaraTax). |
| Saudi Arabia | None | Check the India-Saudi Arabia treaty for interest and dividend rates. |
| Qatar | None | Check the India-Qatar treaty for interest and dividend rates. |
| Kuwait | None | Check the India-Kuwait treaty for interest and dividend rates. |
| Bahrain | None | Check the India-Bahrain treaty for interest and dividend rates. |
| Oman | None until 2028 | A 5% tax on individuals earning over OMR 42,000 a year starts on 1 January 2028. |
In each case the questions are the same: could the deemed residency rule apply to you, can you obtain a residency certificate from your country's tax authority, and what rate does that treaty allow on your Indian income?
Coming back
Returning to India from the Gulf
Many Gulf NRIs eventually return to India. In the first years back, you may qualify as RNOR, which keeps most foreign income outside Indian tax for a limited period. Use that window to plan when to bring savings back and how to treat any end-of-service benefits.
Once you return and become resident, your NRE and FCNR accounts need to be redesignated and treaty claims stop applying in the same way. Read our guides to RNOR status for returning NRIs and Schedule FA for returning NRIs before the move.
Records Gulf NRIs should keep each year
- Passport pages and an official entry and exit record for the UAE or your Gulf country.
- A day count for India for the financial year, April to March.
- Your UAE Tax Residency Certificate, or the equivalent from your country.
- The Form 10F acknowledgement from the income tax portal.
- A summary of all Indian income: rent, NRO interest, dividends and any capital gains.
- Form 26AS and your Annual Information Statement, to match the TDS deducted.
- NRO and NRE bank statements, and property or investment documents.
Avoidable problems
Common mistakes Gulf NRIs make
- Assuming that living in a zero-tax country means no Indian return is ever needed.
- Not checking the ₹15 lakh threshold in a year with a large Indian property or share sale.
- Relying on a UAE certificate issued under the 90-day route for a treaty claim without checking the treaty's 183-day test.
- Giving the bank a TRC but not filing Form 10F, or sending them after the interest has already been credited.
- Letting NRO interest be taxed at 30% year after year instead of claiming the treaty rate or a refund.
- Not tracking days in India when Indian income is above ₹15 lakh.
If you have already filed with the wrong residential status, read how NRIs can correct an Indian ITR.
Watch the video
How India taxes NRIs in the UAE and Gulf
This CBTD video covers deemed residency, the 120-day rule, the UAE Tax Residency Certificate and India-UAE treaty rates in under two minutes.
FAQs
Gulf NRI tax residency questions
Can an NRI living in the UAE be treated as a resident of India?
Yes, in some cases. Under the deemed residency rule, an Indian citizen whose income from Indian sources exceeds ₹15 lakh in a year and who is not liable to tax in any other country because of domicile or residence can be treated as resident in India, even without spending time here. The person is classified as resident but not ordinarily resident.
Will India tax my UAE salary if I become a deemed resident?
Generally no. A deemed resident is classified as resident but not ordinarily resident, and income earned and received outside India is generally not taxed in India for that status, unless it comes from a business controlled in India or a profession set up in India. The change mainly affects your Indian return, your status and your paperwork.
Does a UAE Tax Residency Certificate stop me becoming a deemed resident?
Not automatically. Deemed residency turns on whether you are liable to tax in another country, and the UAE does not levy personal income tax. A UAE TRC is important evidence for claiming treaty benefits, but whether it changes the deemed-residency position depends on your facts and is best reviewed with a Chartered Accountant.
How many days do I need in the UAE to get a Tax Residency Certificate?
Individuals generally qualify with at least 183 days in the UAE in a 12-month period, or at least 90 days together with UAE nationality, GCC nationality or a UAE residence permit and a permanent home or employment or business in the UAE. Applications are made through the Federal Tax Authority's EmaraTax portal.
What TDS applies to NRO interest for a UAE resident?
Indian banks generally deduct tax on NRO interest at 30% plus surcharge and cess for non-residents. Under the India-UAE DTAA, tax on most interest is capped at 12.5% for a UAE treaty resident, but only if the bank receives a valid UAE Tax Residency Certificate and Form 10F before the interest is credited.
Is NRE interest taxable for NRIs in the UAE?
Interest on NRE accounts is exempt from Indian tax under domestic law while you qualify as a non-resident, so the treaty is not needed for it. NRO interest is taxable in India and is where the treaty rate makes a difference.
Do the other Gulf countries have the same treatment?
Saudi Arabia, Qatar, Kuwait, Oman and Bahrain currently do not levy personal income tax on salaries, and India has a tax treaty with each of them. Oman will introduce a 5% personal income tax for individuals earning over OMR 42,000 from 1 January 2028. Treaty rates and residence tests differ, so the treaty for your country must be checked.
Living in the UAE or Gulf?
Check your Indian residency position before you file
Share your Indian income, your days in India, your Gulf residency documents and any treaty claims made so far. CBTD can help organise a residency and DTAA review with a practising Chartered Accountant.
Disclaimer: This guide is for general informational purposes only and should not be treated as tax, legal, FEMA or accounting advice. Residency and treaty positions depend on the law of both countries, the exact treaty and protocol, individual facts, supporting evidence and current filing requirements. UAE and GCC rules can change; check current requirements before acting.