NRIs in the UAE: You Could Be Paying 0% Tax on Mutual Fund Gains in India — here’s Practical Guide

If you’re an NRI based in the UAE and have invested in Indian mutual funds, you may be eligible for a big tax break.

And we’re not talking loopholes. This is legal, government-backed, and part of India’s Double Taxation Avoidance Agreement (DTAA) with the UAE.

Here’s your step-by-step guide to understanding:

• How capital gains on mutual funds can be tax-free in India
• What you need to claim this exemption (hint: TRC is key)
• How to file your ITR correctly to stay compliant and get a refund, if TDS was deducted

India and the UAE have had a DTAA in place for years. What this means for you as an investor is:

If you are a UAE tax resident, and you sell Indian mutual funds for a gain, India may not tax that capital gain — as per Article 13 of the DTAA.

That’s because the right to tax capital gains lies only with your country of residence.
And the UAE has zero income tax for individuals.

So if done right, you pay 0% in India and 0% in UAE. Yes — it’s that powerful.

This DTAA benefit isn’t automatic. The Indian government needs proof that:

• You’re a UAE resident
• You don’t have any permanent establishment (like a business or office) in India
• You’re filing your tax return in India properly

Let’s walk through the steps to do this right.

Step 1: Confirm Your Eligibility

You qualify if:

• You are an NRI as per Indian tax law (outside India > 182 days)
• You are a tax resident of the UAE during the relevant financial year

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

This is the most critical document. No TRC = No DTAA benefit.

How to Apply:

1. Go to the UAE’s Ministry of Finance Portal
    https://www.mof.gov.ae
2. Register/Login to the EmaraTax platform
3. Apply for a Tax Residency Certificate
   • Upload passport, Emirates ID, visa page, bank statement (6 months), address proof, and Indian income details
   • Pay AED 50 for pre-approval and AED 1,000 for TRC issuance
4. TRC is issued digitally in about 5–10 working days

Step 3: Fill Out Form 10F (Simple Declaration)

Form 10F is a short online form on the Income Tax India portal. It declares:

• Your name, nationality, and tax residency (UAE)
• That you have no permanent establishment in India

You can do this online with your PAN login.

Step 4: Write a Self-Declaration Letter

Include:

• That you’re a UAE resident
• You do not have any base or operations in India
• You are claiming DTAA benefits on capital gains

This helps the mutual fund company and Indian tax authorities process your exemption.

Step 5: Submit These to AMC or Registrar

Send these documents to:

• Your AMC (like HDFC Mutual Fund, ICICI Prudential, etc.)
• Or their official registrar (like CAMS or KFintech)

This ensures either:

• TDS is not deducted, or
• You can easily claim a refund via ITR

No worries. Even if TDS was deducted when you redeemed your mutual funds, you can still:

• File your ITR
• Claim full refund
• Mention TRC, Form 10F, and DTAA in your return

Let’s look at the ITR side now.

Even though your capital gains are exempt, filing your Income Tax Return (ITR) in India is still:

• Mandatory if TDS was deducted
• Recommended to report large investments
• Helpful to keep your record clean as an NRI

Use Form ITR-2 (for capital gains + foreign residency).

What to Include:

• Your UAE residency details
• Capital gains under “Exempt Income”
• Attach TRC details
• Fill Schedule FA and DTAA treaty references

This ensures full transparency and avoids red flags later.

We at Zenify Consultancy Services work exclusively with NRIs and regularly assist UAE-based individuals and families with:

• Applying for TRC via EmaraTax
• Filing ITRs with DTAA disclosure
• Drafting Form 10F and declarations

Reach out if you want us to handle the entire DTAA process while you focus on your wealth.