TRW & Co · Double tax treaties
UAE-India Tax Treaty: Residency, Withholding and Compliance
The UAE India DTAA caps the tax India can withhold from UAE residents, at 10% on dividends and royalties and 5% or 12.5% on interest, and decides when a business in one country is taxable in the other. This guide explains residence, the income articles, permanent establishment risk and the documents needed to claim relief.
Key pointTreaty residence for individuals needs 183 days in the UAE in the calendar year, a stricter test than the UAE's domestic 90-day route, so a UAE tax residency certificate alone may not secure Indian treaty rates.
At a glance
Withholding caps
Indian tax on payments to UAE residents is capped at 10% for dividends and royalties, 5% for bank interest and 12.5% for other interest.
Individual residence
The treaty treats an individual as UAE resident after at least 183 days of presence in the calendar year; tie-breakers decide dual residence.
Capital gains
Since the 2007 protocol, India may tax gains on shares in Indian companies sold by UAE residents, so relocating does not remove the gain.
Service PE
Services through personnel in India create a permanent establishment if activities on a project continue for more than nine months in any twelve.
Documents
Claims need a UAE treaty-purpose residency certificate plus India's prescribed self-declaration, renumbered under the Income-tax Act 2025 rules.
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The short answer: what the UAE India DTAA does
The UAE India DTAA is the double taxation avoidance agreement between the two countries. It decides which country may tax income that crosses between them and caps the tax India can withhold on payments to UAE residents: 10% on dividends, 5% on interest from banks and 12.5% on other interest, and 10% on royalties. It also sets the residence tie-breakers and the permanent establishment rules that decide whether a business in one country is taxable in the other.
Because the UAE does not tax most individuals' income, the treaty matters mainly in one direction: it limits Indian tax on UAE residents. For companies, it now interacts with UAE corporate tax too. The benefits are not automatic. India requires a tax residency certificate and a self-declaration before a payer or the tax department will apply treaty rates, and anti-abuse rules can deny relief to structures without substance.
This guide, current as of October 2026, covers residence, the main income articles, permanent establishment risk, the documents and the common scenarios for non-resident Indians and businesses. For the UAE's wider network, see our guide to UAE double tax treaties.
The legal framework on both sides
The agreement was signed in New Delhi on 29 April 1992 and entered into force on 22 September 1993. It was amended by a protocol notified in India in November 2007, which among other things changed the residence rule for individuals and the capital gains article, and its exchange-of-information article was replaced in 2013. The current text and the synthesised text showing the effect of the Multilateral Instrument are published by India's Income Tax Department; the UAE Ministry of Finance lists its treaties on its double taxation agreements page.
Both countries applied the OECD Multilateral Instrument (MLI) to the treaty. The most important consequence is the principal purpose test: a treaty benefit is denied if obtaining it was one of the principal purposes of an arrangement, unless granting it is in line with the treaty's object and purpose. For Indian withholding taxes, the MLI changes apply to payments from 1 April 2020.
Domestic law then fills the gaps. In India, the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, with new Income-tax Rules and renumbered forms; treaty relief continues to depend on a residency certificate and prescribed particulars. In the UAE, residence is governed by Cabinet Decision No. 85 of 2022 and companies are taxed under the Corporate Tax Law, Federal Decree-Law No. 47 of 2022. Trade and investment sit alongside under the two countries' comprehensive economic partnership agreement and a bilateral investment treaty signed in 2024.
Residence and the tie-breaker under the UAE India DTAA
Individuals
For the treaty, an individual is a UAE resident if present in the UAE for at least 183 days in the calendar year concerned. That is narrower than UAE domestic law: Cabinet Decision No. 85 of 2022 also treats people as resident after 90 days with a residence permit and a home or job here, or where their primary residence and centre of interests are in the UAE. A domestic tax residency certificate does not therefore guarantee treaty residence for an Indian claim.
India taxes residents on worldwide income and non-residents on Indian-source income. Its tests are based on days in India: the basic threshold is 182 days in the year, with lower thresholds for Indian citizens and persons of Indian origin who visit India and have significant Indian income, and a "deemed residence" rule for some citizens who are not liable to tax in any other country. People who move to Dubai mid-year, or who spend long periods in India, should count days carefully on both sides.
If someone is resident in both countries, the treaty tie-breaker applies in order: permanent home, then centre of vital interests, then habitual abode, then nationality, and finally agreement between the tax authorities.
Companies
A company is a UAE resident for the treaty if it is incorporated in the UAE and managed and controlled wholly in the UAE. Dual residence is resolved by place of effective management. India also treats a foreign company as resident if its place of effective management is in India, so a Dubai company whose directors take decisions from Mumbai can lose its treaty position entirely. Our guide to UAE tax residency certificates covers the evidence the FTA asks for.
How the UAE India DTAA treats common income
| Income | Treaty article | Effect for a UAE resident |
|---|---|---|
| Dividends from an Indian company | Article 10 | India may tax, capped at 10% of the gross dividend for the beneficial owner |
| Interest | Article 11 | India may tax, capped at 5% on loans from banks or similar financial institutions and 12.5% in other cases |
| Royalties | Article 12 | India may tax, capped at 10% of the gross royalty; the definition does not expressly include fees for technical services |
| Gains on shares of an Indian company | Article 13 | India may tax; property-rich shares may also be taxed where the property is |
| Rent and gains from Indian property | Articles 6 and 13 | India may tax without treaty limit |
| Business profits | Article 7 | Taxable in India only if earned through a permanent establishment there |
| Other gains | Article 13 | Generally taxable only in the country of residence |
The caps are maximums. India's domestic rate may already be lower, in which case the lower rate applies. Where India does tax, a UAE company may be able to credit the Indian tax against UAE corporate tax under Article 47 of the Corporate Tax Law; for individuals, who pay no UAE income tax, the Indian tax is usually a final cost.
Mutual fund units and other investments
Not every Indian investment is a "share". Units in Indian mutual funds are typically issued by a trust rather than a company, and taxpayers have argued that gains on them fall under the residuary rule in Article 13, taxable only in the country of residence. Indian tribunals have considered that argument, but the position depends on the facts and on how the tax department applies it under the new Act. Anyone relying on it should take India-specific advice, keep the UAE certificate and self-declaration in place before redeeming, and disclose the position clearly in the Indian return.
The capital gains article is the one most often misunderstood. Since the 2007 protocol, India may tax gains on shares in Indian companies sold by UAE residents. A move to Dubai before selling Indian shares does not, by itself, take the gain out of Indian tax under the UAE India DTAA.
Permanent establishment risk for businesses
A UAE company is taxed in India on business profits only if it has a permanent establishment (PE) there. Under the treaty, a building site, construction or assembly project, and related supervision, becomes a PE only if it lasts more than nine months. Services, including consultancy, furnished through employees or other personnel create a PE if the activities on the same or a connected project continue for more than nine months within any twelve-month period.
A fixed place of business, such as an office, branch or a regular desk at a client's premises, can also be a PE, and so can a dependent agent in India who habitually concludes contracts for the UAE company. Founders who run a Dubai company while spending most of the year in India face, under the UAE India DTAA, both PE risk and the place-of-effective-management test described above.
The reverse applies to Indian companies with UAE operations: activity in the UAE can create a UAE PE and a corporate tax registration duty. Our guides to permanent establishment and withholding tax and non-resident corporate tax explain the UAE side.
Claiming treaty benefits: documents and process
- Confirm residence on both sides. Count days for the calendar year (for the treaty) and the Indian tax year, and check the tie-breaker if both countries treat you as resident.
- Obtain a UAE tax residency certificate. Apply to the FTA through EmaraTax for a treaty-purpose certificate naming India and covering the right period. See the FTA's tax residency certificate service.
- File the Indian self-declaration. India requires prescribed particulars that the certificate does not contain, historically on Form 10F, now under renumbered forms in the 2026 Rules, filed electronically on the Indian e-filing portal.
- Give the documents to the payer. Banks, companies, tenants and buyers apply the treaty rate at source only if they have the certificate, the declaration and your Indian tax identification.
- File the Indian return where required. Non-residents with taxable Indian income generally still file, and the return is where excess withholding is reclaimed.
- Claim credit in the UAE where relevant. UAE companies record Indian tax suffered and claim foreign tax credit in the corporate tax return, within the limits of the law.
Illustrative scenarios
Illustrative only; the people and companies are generic.
A non-resident Indian in Dubai
An engineer has lived in Dubai for six years and spends about a month a year in India. He owns a rented flat in Pune, holds fixed deposits in an ordinary non-resident account and a portfolio of listed Indian shares. The rent remains taxable in India and the tenant may need to withhold. Interest on the ordinary non-resident account is taxable in India, and with a UAE certificate and the Indian self-declaration he can ask the bank to apply the 12.5% treaty cap where it is lower than the domestic rate.
Gains on his listed shares remain taxable in India, because the treaty lets India tax gains on shares of Indian companies. He files an Indian return to report the income and reclaim any excess withholding.
A UAE company licensing technology to India
A Dubai free zone company licenses software to Indian distributors and receives royalties. Indian payers withhold tax, capped at 10% under the UAE India DTAA if the company shows treaty residence and beneficial ownership. Because the company's two directors live in Dubai and board meetings are held here, it can evidence management and control in the UAE. It files the Indian forms each year and records the Indian tax for its UAE corporate tax return.
Risks and common mistakes
Relying on a domestic UAE certificate for treaty residence
The FTA can issue a certificate to someone who meets the 90-day test under Cabinet Decision No. 85 of 2022, but the UAE India DTAA asks whether the individual was present in the UAE for 183 days in the calendar year. A payer or Indian assessing officer may look behind the certificate. Check the treaty definition before relying on reduced rates, especially in the year of moving.
Holding structures without substance
Under the principal purpose test, a UAE company set up mainly to access lower Indian withholding can be denied the benefit. Indian authorities look at who makes decisions, where staff and risks sit, and whether income flows straight through to people who would not qualify. A licence and a bank account are not enough; real management in the UAE is.
Missing the paperwork deadline
Without a valid certificate covering the payment date and the Indian self-declaration, payers withhold at domestic rates. Recovering the excess means filing a return and waiting for a refund. Diarise certificate renewals, and request the certificate early, because the FTA processes complete applications in a matter of business days, not on the spot.
Forgetting Indian residence can return
Long stays in India for family or business can make a Dubai-based person resident in India again, taxable on worldwide income including UAE salary and investments. Where both countries treat someone as resident, the tie-breaker usually decides the matter, but only with evidence of a permanent home and centre of vital interests in the UAE.
Ignoring the UAE corporate tax side
UAE businesses owned by Indian residents or non-resident Indians are subject to UAE corporate tax at 9% above the threshold, with relief for small businesses available for tax periods ending on or before 31 December 2029. Individuals running a business in their own name may also need to register once turnover passes the threshold for natural persons. See our guide to corporate tax for individuals.
Checklist and how we help
- Map every Indian income stream and the treaty article that applies to it.
- Test residence in both countries for each year, using travel records rather than estimates.
- Obtain a treaty-purpose UAE certificate naming India for each relevant period.
- File the Indian self-declaration and give payers the documents before payment dates.
- For companies, document management and control in the UAE and review PE exposure in India.
- Record Indian tax suffered for UAE foreign tax credit purposes.
Tax return preparation, bookkeeping and filing work for UAE entities are delivered with our group company A&A Consultancy; Indian returns and Indian-law questions need India-qualified professionals, with whom we coordinate. TRW & Co covers the legal and regulatory side: treaty interpretation, residence and PE analysis, structuring with substance, and disputes. TRW & Co is not a registered tax agent; we coordinate with registered tax agents in the UAE and advisers in India.
For the UAE corporate tax position see corporate tax in the UAE, and for family holdings see family offices in the UAE. To discuss a UAE India DTAA question, contact our Dubai team at info@trw.co or +971 58 942 1012.
Frequently asked questions
01What are the withholding tax rates under the UAE India DTAA?
For a UAE resident beneficial owner, Indian tax on dividends is capped at 10% of the gross amount, interest at 5% where the lender is a bank or similar financial institution and 12.5% in other cases, and royalties at 10%. These are ceilings: if Indian domestic law sets a lower rate, the lower rate applies. To benefit at source, the recipient must give the payer a UAE tax residency certificate and India's prescribed self-declaration.
02Do NRIs in Dubai pay tax in India?
Non-resident Indians pay Indian tax on income that arises in India, such as rent from Indian property, interest on ordinary non-resident accounts, and capital gains on Indian shares and funds. Salary earned for work in the UAE is not taxable in India while they remain non-resident. The treaty reduces Indian tax on some income, such as interest and dividends, but does not remove tax on Indian property income or on gains from Indian shares.
03How do I get a UAE tax residency certificate for India?
Apply to the Federal Tax Authority through EmaraTax for a treaty-purpose certificate naming India and covering the relevant period. Individuals typically provide passport and Emirates ID, an entry and exit report, proof of residence and income; companies provide licence, ownership, audited accounts and evidence of management in the UAE. Check that you meet the treaty's own residence test as well, because India may look beyond the certificate.
04Is Form 10F still required after India's new Income-tax Act?
India's Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, and the Income-tax Rules, 2026 renumbered many forms. The requirement behind Form 10F continues: a non-resident claiming treaty relief must hold a tax residency certificate and provide prescribed particulars not shown on it, filed electronically on the Indian e-filing portal. Check the current form number and filing steps with an India-qualified adviser before each claim.
05Can a UAE company avoid Indian tax on services provided to Indian clients?
Business profits of a UAE company are taxable in India only if it has a permanent establishment there. Under the treaty, services through employees or other personnel create one if activities on the same or connected projects continue for more than nine months in any twelve-month period; an office or dependent agent can also create one. Separately, Indian domestic rules on service fees and the principal purpose test may apply, so contracts and staffing should be reviewed before work starts.
06Does the UAE India DTAA apply to UAE nationals and expatriates alike?
Yes. The treaty applies to residents of either country, whatever their nationality. An expatriate living in Dubai can claim it if they meet the treaty's residence test and hold the required documents. Nationality only matters as a late step in the tie-breaker for people resident in both countries. Indian citizens should also check India's own residence rules, which can treat long-staying visitors or some citizens as resident in India.
Sources and official materials
- Income Tax Department (India): India-UAE DTAA — Treaty text with protocol amendments
- Income Tax Department (India): Synthesised text India-UAE DTAA and MLI — Principal purpose test and MLI effective dates
- Ministry of Finance (UAE): Double taxation agreements — Status of UAE treaties
- FTA: Tax Residency Certificate service — Applying for a UAE treaty-purpose certificate
- Income Tax Department (India): e-filing portal — Indian returns and treaty self-declarations
- Federal Tax Authority: Legislation — Corporate Tax Law and Cabinet Decision No. 85 of 2022 on tax residency
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
