How NRIs in Saudi Arabia Can Use the India-Saudi Arabia DTAA to Plan Their Taxes Better

For NRIs living in Saudi Arabia, managing taxes on income earned or invested in India can be a complex task. However, the Double Taxation Avoidance Agreement (DTAA) between India and Saudi Arabia offers significant relief. With proper planning and documentation, NRIs can reduce or even eliminate their Indian tax liability on certain incomes such as capital gains, interest, and dividends. This blog will explain how Saudi-based NRIs can make use of the DTAA, what tax exemptions they can avail, and how to obtain a Tax Residency Certificate (TRC) to claim these benefits.

The India–Saudi Arabia DTAA is a bilateral agreement that aims to prevent double taxation of the same income in both countries. Since Saudi Arabia does not levy income tax on individuals, NRIs residing there are only taxed in India on their India-sourced income. The DTAA ensures that such income is either taxed at a concessional rate or fully exempt, depending on the nature of income and supporting documentation.

Only NRIs who qualify as tax residents of Saudi Arabia are eligible to claim benefits under the India-Saudi Arabia DTAA. To do so, they must obtain a Tax Residency Certificate (TRC) from the Saudi Zakat, Tax and Customs Authority (ZATCA).

1. Exemption on Capital Gains from Mutual Funds

Under the India-Saudi Arabia DTAA, capital gains from the sale of Indian mutual fund units by an NRI based in Saudi Arabia are not taxable in India, provided the individual is a tax resident of Saudi Arabia. This applies to both equity and debt mutual funds, and is especially beneficial after the recent judgments to capital gains taxation rules in India.

2. Taxation of Interest Income

Interest earned on NRO fixed deposits or savings accounts is taxable in India. However, under the DTAA, such interest may be taxed at a concessional rate, often capped at 10 percent, subject to conditions on status of the assessee.

Interest on NRE and FCNR accounts remains tax-free in India, provided the individual qualifies as a non-resident under Indian tax laws.

3. Dividends from Indian Companies

Dividends received from Indian companies or mutual funds are generally taxable in India at 20 percent. However, under the DTAA, this rate may be reduced to 5 percent for Saudi tax residents, provided the documentation is in place.

To avail of these benefits, NRIs must submit the following to the mutual fund, bank, or income payer in India before the financial year ends or before the transaction:

• Valid Tax Residency Certificate (TRC) issued by the Saudi tax authority
• Duly filled and signed Form 10F
• Self-declaration confirming no permanent establishment (PE) in India and beneficial ownership of income

Applying for a TRC in Saudi Arabia is a digital process handled by the Zakat, Tax and Customs Authority (ZATCA). Here’s how you can do it yourself:

1. Create an Account on the ZATCA Portal

• • Visit: https://gazt.gov.sa or https://zatca.gov.sa
  • Register with your Iqama number, mobile number, and email ID

2. Log in to the Taxpayer Dashboard

• • Select “Certificate Services”
  • Choose “Request for Tax Residency Certificate”

3. Fill in Personal and Residential Information

• • Provide passport details, Iqama number, address in Saudi Arabia
  • Confirm residential status for the applicable financial year

4. Attach Supporting Documents

• • Iqama copy
  • Passport copy
  • Employment letter or salary certificate
  • Visa and entry-exit report (if requested)

5. Submit and Track Application

• • Once submitted, the TRC is generally issued within 3–10 working days

6. Download and Save

• • Once approved, download the signed TRC from your ZATCA dashboard in PDF format
  • This certificate is valid for the financial year for which it is issued

Important Note: Saudi Arabia generally issues the TRC only for the completed financial year. For instance, in FY 2025–26, you will typically be able to obtain a TRC for FY 2024–25 only. Mutual funds and Indian institutions may insist on a TRC for the current year, which can create a mismatch. In such cases, it is advisable to submit the available TRC with a declaration that the TRC for the current year will be furnished once issued, along with Form 10F for the current year.

• NRIs in Saudi Arabia can enjoy exemption from capital gains tax on mutual funds, and reduced tax rates on dividends and interest income from India under the DTAA
• To claim these benefits, they must submit Form 10F, TRC, and a self-declaration
• Saudi TRCs can be applied online through the ZATCA portal and are typically issued for the previous financial year
• Planning documentation and claiming the benefit proactively can save significant tax and avoid unnecessary TDS deductions in India

If you are an NRI in Saudi Arabia with investments, property income, or bank accounts in India, it’s advisable to plan your taxes early each financial year, ensure your TRC and Form 10F are ready, and consult a professional if you face compliance difficulties or repatriation challenges.

For personalised assistance in applying for a TRC, preparing Form 10F, or claiming DTAA-based exemptions, feel free to contact our team at Zenify Consultancy Services at www.CAforNRI.com or email us at contact@cafornri.com.