Moving to Dubai from India

Moving to Dubai does not, by itself, end your Indian tax position. You become a non-resident for Indian tax only by failing India's day tests and avoiding deemed residency. Your bank accounts must be redesignated under FEMA, and your Indian company, its dividends and your directorship each need planning. UAE tax residence depends on days and ties.

Key points

• Indian tax residence turns on days in India in each tax year (April to March): 182 days, or 60 days plus 365 days over the previous four years, with special rules for citizens.

• An Indian citizen with Indian income above ₹15 lakh who is not liable to tax elsewhere can be deemed resident, so a UAE move needs evidence of UAE tax residence.

• Under FEMA, your status changes when you leave to live abroad, and resident savings accounts must be redesignated as NRO accounts.

• Your Indian company stays Indian resident, but running it from Dubai can raise UAE residence and permanent establishment questions.

• UAE tax residence under Cabinet Decision 85 of 2022 has three routes; the India–UAE treaty uses a stricter 183-day calendar-year test.

Most founders who move keep the Indian business running. If you are also setting up a business in the UAE, start with our guide on how to start a business in Dubai from India. This guide covers you, the person, and the company you leave behind.

How do you become an NRI for tax after moving to Dubai?

You become a non-resident for an Indian tax year if you meet none of the residence tests in section 6 of the Income-tax Act, 2025. The rules are the same as under the 1961 Act, but the "previous year" is now the "tax year", and the first tax year under the new Act is 2026-27.

An individual is resident in India in a tax year if they are in India for:

• 182 days or more in that tax year; or

• 60 days or more in that tax year and 365 days or more in the four preceding tax years.

Two exceptions change the 60-day test for Indian citizens. If you leave India for employment abroad, the 60 days become 182 days for the year you leave. If you are a citizen or person of Indian origin living abroad and visit India, the 60 days also become 182 days, except that they become 120 days if your Indian income (excluding foreign-source income) exceeds ₹15 lakh.

The year you leave is usually resident. Suppose the founder of an ₹80 Cr Ahmedabad distribution business moves to Dubai on 1 October 2026. He has already spent more than 182 days in India in tax year 2026-27, so he is resident for that year. Whether a founder who moves to run his own business counts as "leaving for employment" for the relaxed test depends on the facts, so plan on the first year being resident.

The following years depend on visits. From tax year 2027-28, he can visit India for up to 181 days if his Indian income is ₹15 lakh or less. If his Indian income is above ₹15 lakh, the limit falls to 119 days before the 120-day test can apply, and in that case he becomes "resident but not ordinarily resident" (RNOR).

What is deemed residency, and does it apply to Indians in Dubai?

Deemed residency catches Indian citizens who avoid residence everywhere. Under section 6(7) of the Income-tax Act, 2025 (formerly section 6(1A) of the 1961 Act), an Indian citizen whose total income, other than income from foreign sources, exceeds ₹15 lakh is deemed resident in India if they are not liable to tax in any other country because of domicile, residence or a similar criterion.

The UAE does not levy personal income tax on salaries or investment income, so the question is whether you are "liable to tax" there. Being a UAE tax resident under UAE law, evidenced by a tax residency certificate, is the practical answer most advisers rely on, though the point is not settled for every case.

A deemed resident is treated as RNOR. RNORs are taxed in India on Indian income and on foreign income from a business controlled in India or a profession set up in India, but not on other foreign income. For a founder who still controls a Dubai company from India, that exception matters.

How is an NRI taxed in India?

A non-resident is taxed in India only on income that is received in India or that accrues or arises in India. For most founders that means Indian salary or director's fees, dividends from the Indian company, rent, interest and capital gains on Indian assets.

The India–UAE treaty can then limit Indian tax on some of that income, if you are UAE resident for treaty purposes. See our guide to the India–UAE DTAA for the treaty rates.

What does FEMA require when you become a non-resident?

FEMA uses a different test from income tax. Under section 2(v) of FEMA, you stop being a "person resident in India" when you leave India to take up employment or business abroad, or in circumstances that show an intention to stay outside India for an uncertain period. Your FEMA status can change on the day you leave, months before your tax status does.

The RBI's Master Direction on Deposits and Accounts requires existing resident accounts to be redesignated as Non-Resident Ordinary (NRO) accounts when you leave in this way. In practice:

• NRO account. Holds Indian income such as rent, dividends and pension. Remittance abroad from NRO balances is permitted within an overall limit of US$1 million per financial year, subject to tax compliance.

• NRE account. Holds money brought in from abroad. It is freely repatriable, and interest is generally tax-free in India.

• Investments. Tell your bank, depository participant, broker and mutual fund houses about your new status. Holdings acquired as a resident generally continue, but the account type and repatriation rights change.

You can no longer use the Liberalised Remittance Scheme, which is only for residents. If you plan to fund a UAE company from India before you leave, read our guide on how an Indian founder can fund an overseas company: ODI vs LRS.

What happens to your Indian company when you move to Dubai?

Your Indian company does not move with you. It remains an Indian company, resident in India by incorporation, and keeps its Indian tax, GST, Companies Act and FEMA obligations. What changes is your role and how money reaches you.

Directorship. You can remain a director as a non-resident. But under section 149(3) of the Companies Act, 2013, every company needs at least one director who has stayed in India for 182 days or more in the financial year. If you were the only resident director, appoint another before you leave.

Pay. Director's fees from an Indian company can be taxed in India under Article 16 of the India–UAE treaty, wherever the board meeting takes place. Salary for work physically done in Dubai is treated differently from director's fees, so the label and the contract matter.

Dividends. Dividends from the Indian company are taxable in India. The domestic withholding rate for non-residents is 20% plus surcharge and cess; the India–UAE treaty caps it at 10% of the gross dividend if you are the beneficial owner and a UAE treaty resident with a tax residency certificate and Form 41. Our guide on dividends, service fees and royalties between India and the UAE compares the routes.

Where the company is managed. If you run the Indian company day to day from Dubai, the UAE may treat it as effectively managed and controlled in the UAE and so a UAE Resident Person for corporate tax. The India–UAE treaty then decides residence by place of effective management. Our guide to place of effective management explains the test.

Permanent establishment. Separately, a founder in Dubai who habitually signs contracts for the Indian company could create a UAE permanent establishment for it. The reverse applies to a new Dubai company you run while spending long periods in India; see permanent establishment risk between India and the UAE.

Ownership. Some founders use the move to rethink who owns what. If you are also building a UAE business, our guide on who should own your Dubai company covers the choice between the Indian parent, the promoter and a holding company.

How do you become a UAE tax resident?

Under Cabinet Decision No. 85 of 2022, effective 1 March 2023, an individual is a UAE tax resident if any one of these applies:

• they are physically present in the UAE for 183 days or more in the relevant 12 consecutive months;

• they are present for 90 days or more in that period, are a UAE or GCC national or hold a valid residence permit, and either have a permanent place of residence in the UAE or carry on employment or a business there; or

• their usual or primary place of residence and centre of financial and personal interests are in the UAE.

A residence visa is not the same as tax residence. The FTA's Tax Residency guide says any part of a day in the UAE counts as a full day, and days do not need to be consecutive.

The UAE does not tax employment income. A natural person running a business in their own name is subject to UAE corporate tax only where business turnover exceeds AED 1 million in a calendar year. A company you set up pays corporate tax under the UAE corporate tax rules.

Do you need a UAE tax residency certificate?

If you want treaty benefits in India, yes. The India–UAE treaty treats an individual as a UAE resident only if present in the UAE for at least 183 days in the calendar year, so the 90-day domestic route is not enough for treaty claims.

The certificate is issued by the Federal Tax Authority through EmaraTax, and India then requires Form 41 under section 159 of the Income-tax Act, 2025. Our guide to the UAE tax residency certificate for Indians covers eligibility, documents and fees.

Note the mismatch in calendars. India's tax year runs April to March; the UAE's individual tax period and the treaty's day test run January to December. Plan your travel so that both counts work.

When should you plan the move?

Plan at least one Indian tax year ahead. The decisions that matter most are taken before you leave, not after.

• Count days. Model your days in India and the UAE for the year you leave and the next two.

• Timing of gains. Large disposals of shares or property are usually best reviewed before and after the move, since status on the date of transfer and the treaty both affect the result. Moving shortly before a large sale invites scrutiny under the treaty's limitation of benefits clause and the Principal Purpose Test.

• Board and roles. Appoint a resident director, rewrite delegations, and decide what you will and will not decide from Dubai.

• Banks and investments. Redesignate accounts, update KYC, and open NRE accounts.

• Evidence. Keep your UAE lease, Emirates ID, entry and exit report and utility bills; you will need them for the certificate and any Indian enquiry.

The Greenwolf view

A move to Dubai works when it is a real move: your home, family life, work and decisions shift with you. It goes wrong when it is a tax label on an unchanged life, with the founder still running everything from India for half the year. Commercial design comes first; tax follows functions, risks and substance.

Before moving, ask four questions. Why is the move happening, and would you make it without the tax angle? Who will run the Indian company day to day? Which decisions will you take, and from where? And what evidence will show, three years later, that your life and your companies matched the plan? Our article on how founder behaviour quietly shifts tax residency shows how the gaps appear.