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easyTax Consultant interview question

A client working in Dubai has rental income from a flat in India. How would you explain the role of the India–UAE tax treaty?

What the interviewer wants to hear

  • Treaty decides which country can tax each type of income
  • Income from immovable property is generally taxable where the property is located
  • UAE has no personal income tax, so India’s tax is the main cost
  • Residency status in India matters
  • Compliance: Indian return, TDS by tenant, documentation

Model answer

I would explain that a tax treaty decides which country gets to tax each type of income, so the same income is not taxed twice. For income from immovable property, like rent from a flat in India, treaties generally allow the country where the property is located to tax it. So the rent remains taxable in India, whether or not he is resident in India. Since the UAE does not currently levy personal income tax on such income, there is normally no double tax to relieve; the Indian tax is the real cost. If he is a non-resident, the tenant may have to deduct TDS under the rules for payments to non-residents, and he can claim that credit by filing an Indian return. Under Indian rules he still gets the 30% standard deduction and interest deduction where available. I would also check his residential status each year, because his days in India could change it.

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