Indian founder moving to Dubai: tax residency, NRO and the UAE TRC

An Indian founder moving to Dubai changes status under three tests. Under FEMA, residence turns on why you left: leaving to run a business abroad can make you non-resident the day you go, and your resident account becomes NRO. Under section 6 of the Income-tax Act 2025, residence is a day count over the tax year, with a 120-day limb and a deemed-residency rule for citizens with non-foreign-source income above Rs 15 lakh. The UAE counts 183 days, or 90 with a residence permit and a home, job or business.

Three tests, three clocks

The first is FEMA. Section 2(v) of the Foreign Exchange Management Act 1999 defines a person resident in India by more than 182 days in the preceding financial year, then carves out anyone who has left for employment or a business abroad, or intending to stay outside India for an uncertain period; section 2(w) makes everyone else a person resident outside India. The test turns on why you left and can flip on the date of departure; every rule below hangs off it.

The second is income tax. Section 6 of the Income-tax Act 2025, in force from 1 April 2026, counts days in India over the tax year, on the limbs set out in Schedule A. So in the year of the move FEMA can call you non-resident while the day count still makes you resident for tax.

The third is the UAE. Cabinet Decision No. 85 of 2022, effective 1 March 2023, sets the tests, Ministerial Decision No. 27 of 2023 defines the terms, and the Federal Tax Authority certifies. Where the company rather than the founder is the question, see a Dubai company run from India: POEM, UAE residency and QFZP substance.

Schedule A · Individual residency, India against the UAE, as at 25 September 2026
Point	India: section 6, Income-tax Act 2025	UAE: Cabinet Decision 85 of 2022 and Ministerial Decision 27 of 2023
Main day-count test	182 days or more in India in the tax year	183 days or more in any consecutive 12-month period; every calendar day or part of a day counts, and the days need not be consecutive
Second limb	60 days or more in the year plus 365 or more in the preceding four; the 60 becomes 120 for a citizen or person of Indian origin with non-foreign-source income above Rs 15 lakh	90 days or more in any consecutive 12-month period for a UAE or GCC national or a valid residence-permit holder with a permanent place of residence, or employment or a business, in the UAE
Test that ignores the day count	Deemed resident, section 6(7): an Indian citizen with non-foreign-source income above Rs 15 lakh who is not liable to tax in any other country or territory by reason of domicile, residence or any similar criterion	The UAE is the usual or primary place of residence and the centre of financial and personal interests, judged by settled routine, occupation, family ties and place of business
Year of departure and special days	A citizen leaving India for employment abroad is resident only under the 182-day limb in that year	Days present because of exceptional circumstances beyond the person’s control may be disregarded by the FTA
Certificate and evidence	Status follows the section 6 day counts for each tax year. An NRI with only TDS-suffered investment income or long-term capital gains need not file (section 216, formerly section 115G)	TRC through EmaraTax, domestic or for a double taxation agreement. 183 days or more: Emirates ID or passport plus the ICP entry and exit report. 90 to 182 days: plus proof of employment, business or a permanent place of residence. Primary-residence route: plus proof of interests and income

Section 6 is cited generally, and section 6(7) for deemed residency, as confirmed on the Income Tax Department e-filing portal as at 25 September 2026; FTA terms from the issuance of tax certificates page, same date.

The 120-day rule and deemed residency

Two limbs in section 6 target the citizen who keeps meaningful Indian income after leaving. The first is the 120-day rule. Where income other than income from foreign sources exceeds Rs 15 lakh in the tax year, the 60-day limb becomes 120 days, still paired with 365 days in the preceding four years. A founder whose income other than income from foreign sources stays above that line, who spends 120 days or more in India in the year and has spent 365 days or more there over the preceding four years, meets the test whatever the UAE has certified.

The second is section 6(7), deemed residency. An Indian citizen above the same income line who is not liable to tax in any other country or territory by reason of domicile, residence or any similar criterion is deemed resident regardless of days in India. The UAE government portal states that the UAE does not levy income tax on individuals. Whether a UAE resident holding an FTA certificate is “liable to tax” there is the central question, and it is answered on the founder’s facts and the treaty text, not by the certificate. Cabinet Decision 85 of 2022 Article 7 gives an applicable international agreement precedence where it differs from the domestic test. This page does not state the terms of the India-UAE agreement.

The relocation sequence

Run it in this order; step six is the one founders reach last.

Fix the FEMA date and paper it. Record the purpose of departure: employment with the UAE entity, carrying on a business there, or an intention to stay for an uncertain period. That is the section 2(v) test, and its date is when your accounts change character. The employment contract, licence or residence permit is the usual evidence.
Re-designate the resident account as NRO. Paragraph 6.10 of the RBI Master Direction on Deposits and Accounts (last updated 2 September 2026) requires it when a resident Indian becomes a person resident outside India. Write to each bank with the date and keep the acknowledgement.
Open the NRE and FCNR(B) accounts you will use. Remittances outside India from an NRE account are permitted; FCNR(B) deposits hold any permissible currency, as fixed deposits only. NRE interest earned under FEMA is exempt under Schedule IV of the 2025 Act (formerly section 10(4)(ii)).
Route current income correctly. Rent, dividend, pension and interest are permissible credits to a non-resident account provided the income tax on them has been deducted or paid; NRO balances are repatriable by NRIs and PIOs up to USD 1 million per financial year, subject to conditions.
Close every LRS question while you are still resident. The Liberalised Remittance Scheme is written for resident individuals: USD 250,000 per financial year, PAN mandatory. It is silent on a change of status, so anything you intend to move under LRS is decided before the FEMA date, with the AD bank in writing.
Inventory your ODI and settle the APR position. Every foreign shareholding taken as a resident individual under the FEM (Overseas Investment) Directions 2022 carries Form FC at investment and an Annual Performance Report every 31 December. The Directions have no explicit provision on that obligation once the individual is non-resident, so it is agreed with the AD bank before departure, not assumed. Which holdings are ODI, the late submission fees and how a missed trail is fixed are on LRS vs ODI for Indian founders and the ODI regularisation checklist.
Keep the Indian assets on the right footing. Section 6(5) of FEMA lets a person resident outside India hold, own, transfer or invest in Indian currency, securities and immovable property acquired while resident. The holding stays; only the account designation changes, and a non-resident may compute capital gains on Indian company shares in the original foreign currency under section 72 of the 2025 Act.
Build the UAE evidence file, then apply for the TRC. Keep the ICP entry and exit report, the tenancy and the employment contract or licence for the route you rely on. The FTA charges AED 50 to submit, AED 1,000 to issue to a natural person not registered for tax and AED 250 for a printed copy; it issues within 10 business days of a complete application, and the certificate covers one tax period or a chosen 12 months, never a future period. FTA service page, as at 25 September 2026.
Plan the return. Paragraph 4.9 of the Deposits Master Direction requires NRE accounts to be designated resident, or moved to RFC accounts, immediately on return to India, and section 6(4) of FEMA lets a returning resident keep foreign currency, securities and property acquired while outside India.

Who signs what on a founder relocation

Infinilex counsel qualified in India sign the Indian residence analysis and the FEMA position, with Infinilex’s chartered accountant certifying the Annual Performance Report where the Directions name that professional. Infinilex counsel qualified in the UAE sign the UAE residency position. The founder signs the bank’s re-designation request, the LRS declarations and the TRC application; the AD bank reports to the RBI. The company’s own residence is cross-border structuring; the recurring RBI filings are FEMA, ODI and LRS compliance.

Frequently asked questions

Do I still have to file an Indian tax return after moving to Dubai?

It depends on what Indian income you keep. Section 216 of the Income-tax Act 2025 (formerly section 115G) says an NRI need not file where total income is only investment income or long-term capital gains that have suffered tax deduction at source. Interest on an NRE account maintained under FEMA stays exempt, the former section 10(4)(ii) exemption now in Schedule IV. Outside those lines the section 216 relief does not apply and the ordinary filing rules govern, including in a year in which the day counts still make you resident.

Does a UAE tax residency certificate make an Indian founder non-resident for Indian tax?

Not by itself. A TRC evidences UAE residency; it does not change the section 6 day count in India. Section 6(7) of the Income-tax Act 2025 deems an Indian citizen resident, whatever the day count, where non-foreign-source income exceeds Rs 15 lakh and the person is not liable to tax elsewhere by reason of domicile, residence or a similar criterion. The UAE levies no income tax on individuals, so how those words apply to a UAE resident is worked through on your facts, not assumed from the certificate. Article 7 of Cabinet Decision 85 of 2022 gives an applicable double taxation agreement precedence.

What happens to my resident bank account when I become an NRI under FEMA?

It is re-designated, not closed. Paragraph 6.10 of the RBI Master Direction on Deposits and Accounts says when a resident Indian becomes a person resident outside India, the existing resident account is designated NRO. The NRO account takes bona fide rupee transactions: inward remittances and legitimate dues in India as credits; local payments, transfers to other NRO accounts and remittance of current income abroad as debits. NRO balances are repatriable by NRIs and PIOs up to USD 1 million per financial year, subject to conditions.

Can I still remit under the LRS after I move to Dubai?

The Liberalised Remittance Scheme is written for resident individuals: paragraph A.1 of the RBI Master Direction allows remittances by resident individuals up to USD 250,000 per financial year. The Master Direction says nothing about a person whose status has changed. Any remittance you plan under LRS is therefore a question to close, in writing with your AD bank, while you are still a person resident in India under FEMA. Afterwards, rupee money left behind moves through the NRO account within the USD 1 million repatriation ceiling.

Which FEMA obligations continue after a founder becomes non-resident?

Three sets. First, assets: section 6(5) of FEMA lets a person resident outside India hold, own, transfer or invest in Indian currency, securities and immovable property acquired while resident. Second, accounts, which must carry the right designation. Third, overseas investment: the Overseas Investment Directions 2022 require Form FC at investment and an Annual Performance Report every 31 December, and contain no express provision on what happens to that obligation after the investor becomes non-resident, so settle it with the AD bank before you leave. Contraventions carry a penalty under section 13(1) of up to three times the sum involved.

How many days do I need in the UAE for tax residency and the TRC?

Cabinet Decision 85 of 2022 gives three routes: 183 days or more in any consecutive 12-month period; 90 days in that period for a valid UAE residence-permit holder with a permanent place of residence, or employment or a business, in the UAE; or the UAE being the usual or primary place of residence and centre of financial and personal interests. Ministerial Decision 27 of 2023 counts every calendar day or part of a day, non-consecutive days included, and treats a rented furnished apartment continuously available as a permanent place of residence. The FTA issues the TRC within 10 business days of a complete application.

Next step

Moving to Dubai this year?

Tell us your departure date, the Indian income and holdings you keep, any foreign shares and your UAE residency route. We will map the FEMA date, the section 6 exposure, the account changes and the TRC file, in that order.

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Moving to Dubai as an Indian founder: NRI status, deemed residency, account conversion and the UAE TRC