If you are an Indian citizen living in Dubai, the law that decides your Indian tax status changed on 1 April 2026. The Income-tax Act, 1961 was repealed and replaced by the Income-tax Act, 2025, which came into force on 1 April 2026, cutting 819 sections down to 536 and replacing the previous-year and assessment-year pair with a single tax year. The day counts that decide whether you are an NRI did not change. The section numbers did, and so did almost every article you will find explaining them.

This guide covers what determines your residential status under the new Act, the 120-day rule that catches Indians who visit home often, the deemed-residence clause that was written for people living in exactly the kind of place the UAE is, and what India still taxes once you are a non-resident. It is written for salaried professionals and business owners in the UAE who keep Indian bank accounts, property, or investments.

The Law Behind Most NRI Advice Was Repealed on 1 April 2026

The Income Tax Department confirms that the 1961 Act stands repealed on 1 April 2026, with transitional provisions preserving proceedings that relate to earlier years. Residential status for any tax year beginning before that date is still worked out under section 6 of the 1961 Act, even if the assessment happens later.

For tax year 2026-27 onward, section 6 of the 2025 Act governs. The department’s own non-resident FAQ states that no change has been made to the basic conditions for determining individual residency, and that the new deemed-residency provision at section 6(7) mirrors the old section 6(1A).

Did the NRI day-count rules change under the new Act?

No. The 182-day test, the 60-day plus 365-day test, the employment relaxation, the 120-day rule for visiting Indians, deemed residence, and the Not Ordinarily Resident conditions all carried over unchanged. What changed is the numbering, the terminology, and the fact that any guide written before 2026 now cites a repealed statute.

The Day Counts That Decide Your Status

India tests residence on physical presence, not on where you hold a visa. Two basic conditions apply, and meeting either one makes you resident for that tax year.

Test Condition Who it applies to
Basic test 1 182 days or more in India in the tax year Everyone
Basic test 2 60 days or more in the tax year and 365 days or more across the preceding four years Everyone except the two relaxed categories below
Employment relaxation Only the 182-day test applies. The 60-day condition is switched off Indian citizens leaving India for employment abroad, and crew of Indian ships
Visiting-Indian rule 182 days, or 120 days plus 365 days across the preceding four years Indian citizens and PIOs visiting India whose Indian-source income exceeds INR 15 lakh

The tax year runs 1 April to 31 March. Count arrival and departure days as days in India unless you can show otherwise, and keep boarding passes rather than relying on memory at assessment time.

The 120-Day Rule Is the One That Catches Dubai Residents

Most UAE-based professionals never come close to 182 days in India. The rule that actually bites is the reduced 120-day threshold, which applies to Indian citizens and Persons of Indian Origin who visit India and whose total Indian income, excluding foreign-source income, exceeds INR 15 lakh.

Once you cross that income line, four months in India in a single year is enough to make you resident, provided you also spent 365 days or more in India across the previous four years. Long summer visits, an extended stay for a parent’s illness, and a fortnight at Diwali add up faster than people expect.

What actually happens when you cross 120 days

Nothing happens at the airport. The consequence surfaces the following July, when your Indian return has to be filed on the resident schedule, and Schedule FA asks you to disclose foreign assets, including your UAE bank accounts and any UAE company shareholding. That disclosure obligation, not the tax itself, is what most people are unprepared for.

Does rental income from a flat in Mumbai count toward the INR 15 lakh?

Yes. The threshold measures total income other than income from foreign sources, so Indian rent, Indian interest, Indian capital gains, and Indian business profits all count toward it. Your Dubai salary does not.

Deemed Residence: The Clause Written for People Living Where You Live

Section 6(7) of the 2025 Act makes an Indian citizen resident regardless of how many days they spend in India, if two conditions are met at once: Indian-source income above INR 15 lakh, and the person is not liable to tax in any other country or territory by reason of domicile, residence, or any other criterion of a similar nature. Pakistan wrote a similar clause with no income threshold attached to it, which reaches much further down the salary scale: see how Section 82(d) catches Pakistanis in Dubai. Sri Lanka went the other way in 2026 and legislated an express non-residence rule for anyone leaving on a one-year employment contract: see the new Sri Lankan rule for the year you leave.

The UAE levies no personal income tax on salary. That is the whole appeal of living here, and it is also precisely the condition the clause describes. An Indian citizen in Dubai with more than INR 15 lakh of Indian income sits squarely inside the intended scope of the deemed-residence rule, no matter how few days they set foot in India.

Does UAE corporate tax change this?

Not for a salaried employee. Corporate tax at 9 percent applies to business profits above the threshold, not to employment income, so a salaried Dubai resident remains not liable to personal tax in the UAE. A person running a UAE business that is registered for and paying corporate tax has a different and more arguable position, and that is a question for an adviser holding the actual figures.

RNOR: The Status That Softens the Blow

Being resident is not the same as being taxed on worldwide income. India has a middle category, Not Ordinarily Resident, and the department confirms the criteria are unaltered under the new Act: you qualify if you were non-resident in nine out of the ten preceding years, or stayed in India for 729 days or less across the preceding seven years.

An RNOR is taxed on Indian income and on income from a business controlled in or a profession set up in India, but not on unconnected foreign income. For someone returning to India after a decade in the Gulf, this typically buys two tax years before UAE-sourced interest and gains come into charge, which is the window in which most people restructure.

Status Indian income Foreign income Schedule FA disclosure
Non-resident Taxed Not taxed Not required
Resident but Not Ordinarily Resident Taxed Taxed only if from a business controlled in or profession set up in India Required
Resident and Ordinarily Resident Taxed Taxed in full Required

What India Still Taxes While You Are a Non-Resident

Non-residence is not an exemption. India continues to tax income that has an Indian source, and in most cases collects it by withholding at the point of payment rather than waiting for a return.

  • Rent from Indian property. Tax is deducted by the tenant at the non-resident rate, which is materially higher than the rate that applies when the landlord is resident.
  • Interest on NRO deposits. Taxable in India and subject to withholding. Interest on NRE and FCNR deposits is exempt while you hold non-resident status.
  • Capital gains on Indian shares, mutual funds, and property. Taxed in India regardless of where you live. On a property sale the buyer is obliged to withhold from the gross consideration, not from the gain, which is why NRI sellers so often end up filing a return purely to recover the excess.
  • Dividends from Indian companies. Withheld at source.

Why the withholding is almost always more than the tax

Withholding on a non-resident is designed to protect collection, not to approximate liability. If your actual Indian tax on the transaction is lower than the amount deducted, the only route to the difference is to file an Indian return and claim a refund. Filing is voluntary in the sense that nobody compels it, and unavoidable in the sense that the money does not come back otherwise.

The Treaty, the Certificate, and the Calendar-Year Trap

India and the UAE have had a double taxation avoidance agreement since 1993. Access to it depends on being a resident of the UAE as the treaty defines that term, and the treaty’s residence article requires an individual to be present in the UAE for at least 183 days in the calendar year concerned.

India’s tax year runs April to March. The treaty’s UAE residence test runs January to December. Those two windows do not line up, and someone who moved to Dubai mid-year can satisfy one and fail the other. Plan the certificate around the calendar year, not the Indian financial year.

The document that evidences this is the UAE Tax Residency Certificate issued by the Federal Tax Authority, which runs on its own 183-day test. Indian payers will also ask for Form 10F and a self-declaration of no permanent establishment before they will apply a treaty rate.

What the UAE Side Reports About You

The UAE exchanges financial account information with India under the Common Reporting Standard. Your Dubai bank has already asked you to self-certify your tax residence, and the balance and income data attached to that declaration is transmitted annually.

The Income Tax Department has been acting on it. Its August 2026 press release describes a department-wide verification exercise into suspicious foreign remittances, and it is running a second NUDGE campaign aimed specifically at foreign-asset disclosure. If you have ever filed an Indian return on the resident schedule while holding a UAE account, the Schedule FA in that return is the field being cross-checked. The mechanics of what your bank sends and when are set out in our guide to FATCA and CRS reporting by UAE banks.

Large transfers home carry their own compliance layer on the UAE side, covered in moving large sums out of the UAE. The reason any of this matters is that a tax-free UAE salary is only tax free once your home country agrees you are no longer resident there.

The Order to Do This In

  1. Count your days for the current tax year and the four preceding ones. If you cannot produce the count from records, request an ICP entry and exit report for the UAE side and reconcile it against Indian immigration stamps.
  2. Add up your Indian-source income. Rent, interest, dividends, and gains. If the total is near INR 15 lakh, both the 120-day rule and the deemed-residence clause are live for you.
  3. Redesignate resident accounts. An ordinary savings account is not the right vehicle once you are non-resident, and leaving it in place undermines the position you are claiming.
  4. Get the UAE certificate for the calendar year you need it for, then hand Form 10F and the certificate to every Indian payer before they deduct.
  5. File the Indian return even when tax is fully withheld, if the withholding exceeds the liability. That is the only refund route.

What We Could Not Verify

The Reserve Bank of India’s website refuses connections from outside India, including its FAQ pages on accounts held in India by non-residents and its master directions on deposits. We have therefore not restated the specific repatriation ceilings, joint-holding conditions, or documentation requirements for NRE, NRO, and FCNR accounts from a primary source, and you should confirm current limits with your bank in writing rather than relying on any secondary article, including this one.

The department’s FAQ confirms that the Not Ordinarily Resident criteria are unaltered under the 2025 Act, but it does not state in terms whether a person who is resident only by virtue of the deemed-residence clause at section 6(7) is automatically treated as not ordinarily resident, as was the case under the 1961 Act. If deemed residence applies to you, that point is worth a written opinion, because it decides whether your UAE income enters the Indian charge at all.

Frequently Asked Questions

Am I an NRI if I have a UAE residence visa?

A UAE visa is not what determines it. Indian residential status turns on days physically present in India, plus the deemed-residence clause. You can hold a ten-year Golden Visa and still be treated as resident in India in a year when you spent 182 days there.

Do I pay Indian tax on my Dubai salary?

Not while you are a non-resident, because India taxes non-residents only on Indian-source income and a UAE salary for work done in the UAE has no Indian source. If you become resident and ordinarily resident, your worldwide income including that salary enters the Indian charge.

Is interest on my NRE account taxable in India?

Interest on NRE and FCNR deposits is exempt from Indian tax while you hold non-resident status. Interest on an NRO account is taxable and subject to withholding at source. The exemption on NRE interest is tied to your status, so it falls away in a year when you are treated as resident.

What happens to my Indian bank accounts when I move to the UAE?

Resident savings accounts are supposed to be redesignated once you become a non-resident. Leaving an ordinary resident account open and operating is inconsistent with the residential status you are claiming, and it is the kind of detail that surfaces during a verification.

How many days can I spend in India without becoming resident?

Up to 181 days is safe on the basic test alone. If your Indian income exceeds INR 15 lakh and you have spent 365 days or more in India over the previous four years, the ceiling drops to 119 days.

Does the India-UAE treaty stop India taxing my Indian rental income?

No. Treaties allocate taxing rights and reduce rates on certain flows, but income from immovable property is generally taxable where the property sits. A treaty and a certificate can reduce withholding on interest and dividends. They do not remove Indian tax on Indian rent.

Do I need to file an Indian return as an NRI?

You must file if your Indian income exceeds the basic exemption limit, or if you want a refund of tax withheld in excess of your liability. Many NRIs whose only Indian income is fully withheld interest choose to file precisely to recover the excess.

What is Schedule FA and does it apply to me?

Schedule FA is the foreign asset disclosure in the Indian return. It applies to residents, including RNORs, and not to non-residents. It is the single most common failure point for people who become resident in a year without realizing it, because a UAE bank account and any UAE company shareholding both have to be reported.

I sold a flat in India. Why was so much tax deducted?

Withholding on a sale by a non-resident is calculated on the sale consideration rather than on the gain, so it routinely exceeds the actual liability. The remedy is either a lower-deduction certificate obtained before the sale, or an Indian return afterward to claim the refund.

Which law applies to my return for the year ended March 2026?

The Income-tax Act, 1961. The department confirms that residential status for tax years beginning before 1 April 2026 continues to be determined under section 6 of the 1961 Act, even where the assessment or a reassessment happens after the new Act commenced.

Official Sources

Information current as of September 2026. Indian tax law changed substantially on 1 April 2026 and the transitional rules are still being clarified. Verify your position with a qualified Indian tax adviser and with your bank before acting.