NRIs in the UAE: How to Pay 0% Tax on Mutual Fund Gains in India

 



The DTAA Advantage: Zero Tax Legally

 

Under the India–UAE DTAA, capital gains made by a UAE tax resident from the sale of Indian mutual funds are taxable only in the UAE. Since the UAE does not levy personal income tax, this effectively means you pay no tax on these gains at all.

 

Step-by-Step Guide to Claim This Benefit

Step 1: Check Your Eligibility

You qualify if:

  • You’re an NRI (i.e., you stayed outside India for more than 182 days in the financial year).

  • You’re a UAE tax resident during the relevant financial year.

 

Step 2: Get a UAE Tax Residency Certificate (TRC)

This is essential to claim DTAA benefits.

How to apply:

  1. Visit the UAE’s Ministry of Finance online platform.

  2. Register on EmaraTax.

  3. Upload documents like passport, Emirates ID, visa, 6-month bank statement, and proof of Indian income.

  4. Pay the application fee (AED 50 + AED 500).

  5. TRC is usually issued in 5–10 working days.

 

Step 3: Fill Form 10F

This form is available on India’s Income Tax portal. It includes:

  • Your full name, nationality, and UAE tax residency.

  • Confirmation that you don’t have a permanent establishment in India.

 

Step 4: Draft a Self-Declaration

Prepare a letter confirming:

  • You are a UAE resident.

  • You do not have a base or operations in India.

  • You are claiming DTAA benefit on capital gains.

 

Step 5: Submit the Documents

Send your TRC, Form 10F, and self-declaration to your mutual fund company or their registrar (like CAMS or KFintech).

This will help:

  • Avoid tax deduction at source (TDS), or

  • Make it easy to claim a refund later.

 

What if TDS Was Already Deducted?

No problem. You can:

  • File your Indian Income Tax Return (ITR).

  • Claim a full refund of the deducted TDS.

  • Attach your TRC and other supporting documents.

 

Filing an ITR Is Still Recommended

Even with zero tax liability, filing your ITR-2 is:

  • Mandatory if TDS was deducted.

  • Useful for high-value investments.

  • A good way to maintain a clean record with Indian tax authorities.

 

Final Checklist for UAE-Based NRIs

  • ✅ TRC from UAE Ministry of Finance

  • ✅ Form 10F on Indian IT portal

  • ✅ Self-declaration letter

  • ✅ Submit documents to AMC/registrar

  • ✅ File ITR-2 and claim refund or exemption


Want help getting started? Reach out to us today.

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