How is my UAE investment taxed in India?

—Name withheld on request

Making an investment in Dubai will not  have any income tax implication as such. However, certain compliances will have to be met for rules laid out by the Reserve Bank of India and FEMA (Foreign Exchange Management Act) since the money is being sent abroad. 

You may also need to consider the LRS (Liberal Remittance Scheme) for this situation. Once a return on investment is received, then there will be a tax implication. 

The setting up of the company in Dubai will be governed in accordance with the laws of UAE in the particular format or nature of organization that it allows for non-residents of that country. 

A legal form, the basis for identifying applicable laws and regulations, depends mainly on the business requirements.  The legal form of the business must match the business activity. Yes, we have a DTAA with the UAE. 

If a permanent resident of a foreign country, who is also  a non-resident as per FEMA, stays in India for more than 182 days, will the income received by him as interest on non-resident external (NRE) account be exempt under the act? 

—Name withheld on request

Usually, people who visit India temporarily and do not intend to reside here permanently, may continue to claim exemption on interest earned from their NRE account. 

Their status will also be that of a non-resident, or resident but not ordinarily resident for tax purposes. Unless they decide to permanently reside in India, they may continue claiming exemption on interest on NRE account. 

Archit Gupta is founder and CEO at Clear.in.