Business Setup in Dubai from India: ODI, LRS and Tax

Yes, a resident individual in India can own a Dubai company as overseas direct investment under Schedule III of India's Overseas Investment Rules, 2022 (Ministry of Finance, as published on the RBI's site, checked 16 October 2026). The rules allow this in an operating company that is not in financial services and, if you have control in it, has no subsidiary or step down subsidiary. Rule 19 also excludes real estate activity, gambling and rupee-linked financial products. The investment is in equity and counts towards your LRS limit.

Not for a Meydan licence, according to Meydan Free Zone: its India guide (updated 19 July 2026, checked 16 October 2026) says the company can be set up remotely, and that you visit Dubai for a residence visa or if your bank asks for in-person verification. For the residence visa, u.ae (checked 16 October 2026) says applicants aged 18 and over take a medical test, and that you might need to visit an ICP service centre for Emirates ID biometrics. Meydan also says PAN is not needed for a standard free zone setup, but in India the RBI's LRS Master Direction (para 16, checked 16 October 2026) makes PAN mandatory for the remittance that pays for it.

No separate approval is needed if the investment fits the rules: the RBI Master Direction on Overseas Investment (updated as on 1 April 2026, checked 16 October 2026) allows it under the automatic route through your designated bank. You file Form FC, the bank obtains a Unique Identification Number, which the RBI says is not an approval, and you file an annual performance report by 31 December each year (OI Regulations, reg 10(4)). A case under the approval route goes through your bank to the RBI regional office, on the RBI's PRAVAAH portal (Master Direction, para 3(3)).

Up to USD 250,000 per financial year (April to March), according to the RBI's LRS Master Direction (checked 16 October 2026), and that includes your travel, gifts, studies abroad and other remittances in the same year. On LRS remittances of an amount, or aggregate of amounts, above ten lakh rupees, the bank collects tax at source at 20% for purposes other than education or medical treatment (Income Tax Department, Income-tax Act, 2025, section 394, checked 16 October 2026); section 394 does not say in terms whether this applies to the whole remittance or only the part above ten lakh rupees, so ask your bank what it will collect. Your bank may allow setup costs paid before the company exists as pre-incorporation expenses, once it is satisfied they are reasonable, up to USD 100,000 per foreign entity, counted towards your LRS limit (RBI Master Direction on Overseas Investment, para 27(6), checked 16 October 2026).

You can own it from India under the ODI rules, but where it is managed from decides its tax position. Under section 6(10) of the Income-tax Act, 2025 (Income Tax Department, checked 16 October 2026), a company is resident in India in a tax year if its place of effective management, where key management and commercial decisions are in substance made, is in India; the India-UAE treaty treats it as a UAE resident only if it is incorporated in the UAE and managed and controlled wholly there. The department's page on companies (last updated 30 April 2026) says its place of effective management guidelines do not apply to a company with turnover or gross receipts of INR 50 crore or less in a financial year (CBDT Circular No. 8 of 2017, issued under the 1961 Act), and how that applies under the 2025 Act is a question for your chartered accountant. Separately, a UAE residence visa generally lapses after more than 180 days in a row outside the UAE (u.ae, checked 16 October 2026), so check your visa with ICP if you will live mostly in India.

For Indian tax, you are non-resident in any tax year (April to March) in which none of the residence tests in section 6 of the Income-tax Act, 2025 applies (Income Tax Department, checked 16 October 2026). You are resident if you are in India 182 days or more in the tax year, or 60 days or more plus 365 days over the four years before; the 60-day test does not apply to a citizen leaving India for employment abroad, or to a citizen or person of Indian origin visiting India, though for a visitor whose total income other than from foreign sources exceeds fifteen lakh rupees it becomes 120 days. A citizen above that income level who is not liable to tax elsewhere by domicile or residence is deemed resident. For your bank accounts, the RBI defines an NRI as a person resident outside India who is a citizen of India, and works from the Foreign Exchange Management Act definition of residence (RBI Master Direction on Deposits and Accounts, paras 2.4 and 6.1).

Yes, the India-UAE agreement for the avoidance of double taxation has been in force since 22 September 1993, and the Income Tax Department publishes it (checked 16 October 2026) with a synthesised text showing the multilateral convention changes, which apply in India from 1 April 2020. Article 4 sets residence: at least 183 days in the UAE in a calendar year for an individual, and for a company, incorporation in the UAE with management and control wholly there.

Standard, the company and one residence visa, is AED 23,136 at Meydan or AED 23,436 at IFZA, as of October 2026. Premium, which is company, one residence visa and business bank account opening assistance, is AED 28,136 at Meydan or AED 28,436 at IFZA. Bank account opening is subject to each bank's KYC, compliance review and final approval. We prepare the file, pre-check it against the bank's requirements, and if one bank declines we apply to the next.

Your Indian bank's charges, any tax collected at source on the remittance, and the audit and chartered accountant's certificate behind your annual performance report are extra. For other zones: Send your business activity and visa count on WhatsApp and you get an itemised written quote.