UAE TRC Fast Track
Avoid deemed resident status with UAE Tax Residency Certificate
What is This Hack?
NRIs in UAE should obtain Tax Residency Certificate to avoid deemed resident status under Section 6 if Indian income exceeds ₹15 lakh
How It Works
Finance Act 2020 introduced Section 6(1A) - the "Deemed Resident" provision. If you're an Indian citizen living in UAE (where there's NO personal income tax), AND your total Indian-source income exceeds ₹15 lakh annually, you could be deemed a "resident" of India for tax purposes. This means India would tax your GLOBAL income (UAE salary, foreign investments, etc.) at 30% tax slab - a MASSIVE tax hit. However, there's an escape: If you can prove you're a tax resident of another country by obtaining a Tax Residency Certificate (TRC) from UAE, the deemed resident provision doesn't apply. TRC is issued by UAE Federal Tax Authority (FTA) and certifies you're a tax resident of UAE. The certificate costs AED 50-100, takes 1-2 weeks, and saves lakhs in Indian taxes. Most NRIs don't know this exists and pay unnecessary tax or worse - don't disclose foreign income, risking penalties.
Step-by-Step Implementation
Check If You Need TRC
Calculate your total Indian-source income: rental income, capital gains, FD interest, dividend, professional fees from India. If total exceeds ₹15 lakh, you NEED TRC. Even if below, get TRC proactively to avoid disputes.
Verify UAE Residency Eligibility
You need valid UAE residence visa (employment visa, investor visa, golden visa). Tourist/visit visas don't count. You should be physically present in UAE for 183+ days in the tax year. Maintain proof: flight tickets, hotel bills, apartment lease.
Register on UAE FTA Portal
Create account on Federal Tax Authority portal (tax.gov.ae). Use Emirates ID for registration. Link your Emirates ID, passport, and visa details.
Apply for TRC Online
Login to FTA portal → Select "Tax Residency Certificate" → Fill application form with: Personal details (name, passport, Emirates ID), Address in UAE (provide tenancy contract), Tax year required (e.g., 2024), Reason for TRC (mention India DTAA or deemed resident provision). Upload documents: Passport copy, Emirates ID copy, Visa page, Tenancy contract/Ejari, Salary certificate or trade license (proof of income source), Bank statement showing UAE address.
Pay Fee & Submit
Pay TRC fee: AED 50 for individuals via credit card/debit card. Download payment receipt. Submit application. Track status on portal - usually approved in 5-10 working days.
Download TRC & Apostille
Once approved, download TRC PDF from portal. Get it apostilled from UAE Ministry of Foreign Affairs (MOFA) - costs AED 50-100, takes 1-2 days. Apostille authenticates document for use in India. Some accept digital TRC without apostille - check with your CA.
Submit TRC with ITR in India
While filing ITR in India, declare foreign assets in Schedule FA. Attach TRC copy as supporting document. Mention TRC number and issue date. This proves you're NOT deemed resident and protects UAE income from Indian tax.
Real Example: IT Professional in Dubai with Rental Income in Mumbai
Situation
Rajesh works in Dubai earning AED 30,000/month (₹70 lakh annually). He owns 2 apartments in Mumbai generating ₹18 lakh annual rental income (after standard deduction). He spends 200 days in UAE, 60 days in India, 105 days traveling. UAE has no income tax.
Without This Hack
Total Indian income: ₹18 lakh (exceeds ₹15L threshold). Section 6(1A) applies: Rajesh is deemed RESIDENT of India. Tax implications: Indian rental income ₹18L taxed + UAE salary ₹70L ALSO taxed in India (global income taxation). Total taxable income: ₹88 lakh. Tax liability: ₹88L at 30% slab = ₹26.4 lakh + cess = ₹27.5 lakh approx. Even though UAE pays zero tax, India taxes his UAE income because he's deemed resident.
With This Hack
Rajesh obtains UAE TRC (cost: AED 100 = ₹2,300). Submits with ITR. Deemed resident provision doesn't apply. Tax implications: ONLY Indian rental income ₹18L taxed in India. UAE salary ₹70L NOT taxed in India (TRC proves he's UAE resident). Tax liability: ₹18L at 30% = ₹5.4L + cess = ₹5.6L approx. Tax saved: ₹27.5L - ₹5.6L = ₹21.9 lakh! For a ₹2,300 document.
💰 ₹21.9 lakh annual tax saved with ₹2,300 TRC investment = 950x ROI
Common Pitfalls to Avoid
- TRC is valid for one tax year only - must renew annually
- If you don't spend 183+ days in UAE, TRC may be rejected or invalidated
- IT department may still scrutinize - maintain proof of UAE stay (boarding passes, hotel bills)
- If UAE income is remitted to India, must declare in Schedule FA even with TRC
- Some CAs insist on apostilled TRC - budget extra AED 100 and 2 days
- If you move to another country mid-year, TRC becomes complex - consult tax expert
- Deemed resident provision applies even if you have OCI card - TRC is mandatory
- Don't confuse TRC with Trade License or Emirates ID - it's a separate FTA document
Prerequisites & Requirements
- Valid UAE residence visa (employment/investor/golden visa)
- Physical presence in UAE for 183+ days in tax year
- Indian-source income exceeding ₹15 lakh annually (or get proactively)
- Emirates ID card
- Tenancy contract or Ejari (proof of UAE address)
- Salary certificate or trade license (proof of income source in UAE)
- FTA portal registration
- AED 50-150 budget (TRC fee + apostille)
Key Benefits
- Potential savings: ₹5-20 lakhs tax saved
- Implementation time: 1-2 weeks
- Legal status: fully legal
- Risk level: low
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