Structuring Success | Tax and Business Blogs by EAZTAXBIZ

**UAE Resident Investing in Indian Mutual Funds:  DTAA, TRC, and the Debate Between “Pay Tax” vs “No Tax”** Facts of the Case An individual tax resident of the United Arab Emirates has invested in mutual funds in India . On redemption of these mutual fund units, capital gains arise in India. Since the UAE does not levy personal income tax, a recurring and practical question arises: If the assessee is anyway taxed in India at Indian rates, what is the purpose of invoking the India–UAE DTAA and submitting a Tax Residency Certificate (TRC)? This question has gained renewed attention due to recent articles and discussions suggesting that capital gains on Indian mutual funds may be fully exempt under the India–UAE DTAA . Question Raised by the Assessee “ UAE has no tax. I am paying tax in India anyway. Why submit TRC? And some articles even claim that mutual fund gains are not taxable in India at all under the DTAA. Which position is correct?” Answer by the Tax Expert You have spotted...

  History of Income Tax in India & Why the Income-tax Act, 2025 Became a Necessity Income tax in India was first introduced in 1860 by Sir James Wilson to compensate for losses after the 1857 revolt. Post-Independence, multiple fragmented tax laws existed, leading to the enactment of the Income-tax Act, 1961 , which governed India’s direct tax system for over six decades . Over time, frequent amendments, explanations, provisos, and judicial interpretations made the Act lengthy, complex, and litigation-heavy . The law, originally drafted for a manual economy, struggled to align with today’s faceless, digital, and data-driven tax ecosystem . This made the Income-tax Act, 2025 a structural necessity rather than a policy choice. Why the Income-tax Act, 2025 Was Required The objective is simplification and certainty , not increased taxation. The Government recognised the need for a law that is: Easy to read Easy to interpret Easy to comply with while retaining th...