Does a UAE Golden Visa Change Your Indian Tax Residency?

The most common question Indian expats and investors ask is: "Does the UAE Golden Visa change Indian tax residency?" This is because they assume that obtaining a UAE Golden Visa makes them tax residents. However, this isn't correct, and this misunderstanding can lead to costly mistakes.

The simple answer is no: the UAE Golden Visa does not change your Indian tax residency. There's a key difference between residency and tax status. You can hold a visa and not be a UAE tax resident, or you may qualify without realizing it.

Your Indian tax residency depends primarily on the applicable residential-status rules, including the number of days you were physically present in India during a tax year, and certain special or deemed-residency provisions, not on the visa you hold.

Want to know more about it in detail? Then you are on the right page. Read the blog and clear all your doubts about the UAE Golden Visa and Indian tax residency.

Does a UAE Golden Visa Automatically Make You an NRI?

No, a UAE Golden Visa does not automatically make you an NRI or Indian resident in India. Your tax residency in India depends on the applicable residential-status provisions, including your physical presence in India during a tax year and certain special or deemed-residency rules. Considering this, if you satisfy any of the following basic conditions, you are considered an Indian tax resident, subject to the applicable special provisions:

• Spend 182 or more days in India during a tax year or
• Have stayed in India for at least 60 days during the tax year and spent 365 days during the preceding four tax years.

However, special modifications apply to Indian citizens leaving the country for employment, under which the 60-day and 365-day condition does not apply. If you do not meet the applicable residence conditions and no special or deemed-residency provision applies, you are considered an NRI under Indian tax residency rules.

Hence, a UAE Golden Visa holder who spends 200 days in India is considered an Indian resident. If you meet the day-count conditions in India, your UAE visa does not protect your NRI status.

So, even after holding a UAE Golden Visa, your tax status in India can change depending on how many days you spend in India during a tax year. Additionally, the assumption that most NRIs make—that "UAE Golden Visa changes Indian tax residency"—is also dismissed with this information. Now, moving ahead, let's see when the 120-day rule applies to you.

When Can the 120-Day Rule Apply?

The 120-day rule can apply to an Indian citizen or person of Indian origin who visits India and:

• Your total income, other than income from foreign sources, is more than INR 15,00,000 during a tax year; and
• You have stayed in India for 365 days or more during the preceding four tax years.

In these circumstances, if you stay in India for 120 days or more but less than 182 days, you may become a Resident but Not Ordinarily Resident (RNOR), subject to the applicable conditions. Like NRI status, the RNOR status can also limit your tax obligations in India, subject to the applicable conditions.

This was all about the 120-Day rule. Next, let's learn when the Golden Visa makes you a UAE tax resident.

Are Golden Visa Holders UAE Tax Residents?

No, holding a Golden Visa does not automatically make you a UAE tax resident. However, when holding this visa, if you meet the domestic UAE tax residency rules, you may become a UAE tax resident:

• Physically present in the country for at least 183 days during the relevant 12-consecutive-month period.
• Spend at least 90 days in the country during the relevant 12-consecutive-month period and meet the specified residence-permit, permanent-residence, employment, or business conditions.
• Have the UAE as your usual or primary place of residence and the centre of your financial and personal interests, subject to the applicable UAE tax-residency rules.

As a result, holding a Golden Visa while living in India does not, by itself, make you a UAE tax resident. Holding a UAE Golden Visa does not, by itself, make you a UAE tax resident. Moving further, let's look at the India-UAE DTAA and deemed residency.

India-UAE DTAA and Deemed Residency

The UAE has signed Double Taxation Avoidance Agreements (DTAAs) with India and other countries. The India-UAE DTAA can limit the tax that may be imposed by the source country on certain types of income, subject to the specific treaty article and applicable conditions. In simple terms, this agreement prevents the same income from being taxed twice in two different countries. To claim the treaty benefit, you generally need:

• A UAE tax residency certificate (TRC) issued by the UAE FTA, where applicable.
• Meet the residency conditions stated under the agreement.
• To be the beneficial owner of the income where the relevant treaty provision requires it.

For treaty purposes, the India-UAE DTAA has its own residency conditions, including a specific 183-day requirement for an individual to be a resident of the UAE.

A UAE Golden Visa may establish that you have a valid UAE residence status, but it does not by itself establish UAE tax residency or treaty residency. Also, the absence of general personal income tax in the UAE does not by itself determine your Indian deemed-residency status, and holding a Golden Visa does not establish your UAE tax residency.

Final Thoughts

Lastly, the above information makes it clear that it is a myth that a UAE Golden Visa changes Indian tax residency. Holding a UAE Golden Visa does not by itself determine your tax residency status in India or the UAE. Your tax residency status in India is determined under Indian residential-status provisions, while UAE tax residency is determined under UAE tax-residency rules. The India-UAE DTAA also contains separate treaty-residency conditions.

Further, getting confused between your visa and tax residency status can lead to serious legal and financial consequences. To avoid this type of situation, connecting with a tax expert like Savetaxs is a good option. Our tax professionals help you determine your tax status in both countries and meet your tax obligations on time. So, contact us to meet your tax obligations without issues.