From UAE to India: When a temporary return triggers lasting tax risks

taxation. A non-resident is taxed only on Indian income.

An RNOR is generally not taxed on foreign income unless it is linked to a business controlled or a profession set up in India. Once an individual becomes ROR, however, their global income becomes taxable in India.For those returning in the current circumstances, the implications hinge on duration of stay and how residential status evolves.

Even a temporary relocation, if extended, can materially alter one’s tax and regulatory position.If an individual becomes ROR, income not previously taxed in the UAE—such as foreign salary or overseas investment income—may become taxable in India.If business decisions for a UAE-based company are taken from India over a sustained period, it may raise concerns around the place of effective management (POEM), potentially exposing the UAE company itself to Indian taxation.RNOR status offers temporary relief, but not unconditionally. If a business is controlled from India or a profession is set up in India during this period, related overseas income may still fall within the Indian tax net.Tax treaty benefits under the India-UAE DTAA depend on maintaining UAE tax residency, which typically requires a stay of more than 183 days in a calendar year.

If this condition is not met, treaty protection may not apply. This can result in higher taxation on certain Indian incomes, such as higher taxation on dividend instead of 10% under DTAA, loss of capital gains tax exemption on mutual funds, and the inability to claim relief under short-stay provisions leading to full taxation of foreign employment income in India.Once an individual becomes ROR, they must disclose foreign assets and financial interests in Schedule FA of the Indian income-tax