Is UAE gratuity taxable in India for NRIs?

If you maintain NRI status when receiving and transferring gratuity, it's generally not taxable in India under India-UAE DTAA provisions, provided you were a UAE tax resident. However, if you return and become an Indian resident, taxation rules change. Consult a tax advisor for your specific situation.

Can I transfer my entire EOSB amount to India at once?

Yes, there's no upper limit for NRIs transferring funds from foreign accounts to their NRE accounts in India. However, check your UAE bank's daily/transaction limits and plan accordingly.

How long does it take to transfer money from UAE to India?

It depends on the method. Wire transfers typically take 1-2 business days, while services like Emirates NBD DirectRemit can credit HDFC accounts within 60 seconds. Exchange houses usually complete transfers within 24-48 hours.

What's better-NRE FD or GIFT City USD FD for EOSB?

GIFT City USD FDs offer several advantages: higher interest rates (4.5-6%+ vs 6-7% on NRE FDs), tax-free returns, currency protection, and easier repatriation. For long-term parking of EOSB, GIFT City is often the smarter choice. Compare options using our FD comparison tool .

Do I need to pay TDS on money transferred from UAE to India?

No, TDS doesn't apply on incoming remittances to NRE accounts. However, if you transfer to NRO accounts or if the money is considered income earned in India, TDS rules may apply differently.

What is the current AED to INR exchange rate?

Exchange rates fluctuate daily. Use our Rupee vs Dollar Tracker for real-time rates and historical trends to time your transfer better.

Can I invest my EOSB in Indian mutual funds?

Yes, NRIs can invest in Indian mutual funds through the Portfolio Investment Scheme (PIS) route. However, taxation differs from residents. Read our guide on mutual fund taxation for NRIs .

What happens to my NRE account when I return to India permanently?

When you become a resident, your NRE account must be converted to a resident account or closed. However, interest earned on NRE deposits becomes taxable from the day you cease to be a person resident outside India. Plan this transition carefully.

Should I return to India in February-March for tax benefits?

Yes, strategically timing your return during the last two months of the financial year can provide significant tax benefits by extending your NRI and RNOR status. Use our Residential Status Calculator to understand the impact.

Where can I get personalized advice on my EOSB transfer?

Join our WhatsApp Community for quick questions, or download the Belong App to connect with SEBI-registered advisors who specialize in NRI finances.

UAE End-of-Service Benefits: Transfer to India Tax Guide

You've spent years building your career in the UAE. You've saved diligently, sent money home, and now you're looking at a significant lump sum sitting in your UAE bank account-your End-of-Service Benefits.

But here's the question that keeps you up at night: How do I bring this money to India without losing a chunk to taxes or bad exchange rates?

We've been working with NRIs for over 12 years at Belong, and this is one of the most common questions we hear. The good news?

With the right planning, you can transfer your EOSB efficiently, minimize tax liability, and even make it work harder through smart investments like GIFT City Fixed Deposits.

This guide covers everything-from understanding your UAE gratuity calculation to choosing between NRE and NRO accounts, navigating India-UAE DTAA benefits, and finding tax-efficient investment options once your money reaches India.

Understanding Your UAE End-of-Service Benefits (EOSB)

End-of-Service Benefits, commonly known as gratuity, is a mandatory payment that UAE employers must provide to employees when their employment ends. This applies whether you resign, complete your contract, retire, or are terminated (except in specific cases).

The UAE Labour Law (Federal Decree-Law No. 33 of 2021) entitles every worker in the private sector to receive gratuity if they have worked for a minimum of one year.

Who is eligible for EOSB?

All employees-full-time, part-time, or on flexible contracts-may qualify if they've completed at least one year of service. This includes Indian expatriates working across sectors in the UAE.

Key point: UAE nationals receive retirement benefits through the national pension system and are not eligible for gratuity. This benefit is specifically designed for expatriate workers.

Also Read - Can You Retire Early in India with UAE Savings?

How Is Your UAE Gratuity Calculated?

The calculation depends on your length of service and final basic salary. Here's what you need to know:

The Formula:

Gratuity is calculated based on your last basic salary, excluding allowances such as housing, transport, or utilities.

Years 1-5: 21 days' basic salary for each year of service

Beyond 5 years: 30 days' basic salary for each year of service after the first five years

Maximum limit: The total gratuity cannot exceed two years' salary

Calculation Example:

Let's say Rajesh worked in Dubai for 7 years with a final basic salary of AED 10,000 per month.

For the first 5 years: (AED 10,000 ÷ 30) × 21 × 5 = AED 35,000

For the remaining 2 years: (AED 10,000 ÷ 30) × 30 × 2 = AED 20,000

Total EOSB = AED 55,000

You can verify your calculation using our NRI FD Rates Comparison Tool or connect with our advisors in the Belong WhatsApp Community.

What if you resign before completing 5 years?

If you resign on an unlimited contract after 1-3 years, you get 1/3 of 21 days' basic salary for each year. After 3-5 years, you get 2/3 of 21 days' basic salary for each year.

👉 Tip: Check your employment contract and verify these calculations with your HR department before your last working day. Employers must pay within 14 days of contract termination.

Is Your EOSB Taxed in the UAE?

Here's the simple answer: No.

The UAE has no personal income tax, which means your End-of-Service Benefits are paid to you in full without any deductions for tax. This is one of the biggest advantages of working in the UAE.

However, the tax story changes completely once you transfer this money to India.

Transferring Your EOSB from UAE to India: Your Options

Now comes the practical part-how do you actually move this money from your UAE bank account to India?

Best Transfer Methods

1. Bank Wire Transfers

Most banks in the UAE offer direct remittance services to Indian banks. This method is secure and reliable but may come with higher fees and longer processing times.

Major UAE banks like Emirates NBD, ADCB, Mashreq, and FAB offer India remittance services. Emirates NBD has partnered with HDFC Bank for its DirectRemit service, which can transfer funds to HDFC Bank accounts within 60 seconds.

2. Online Money Transfer Services

Companies like Vance (now Aspora), TransferWise (Wise), Xoom, and Remitly offer competitive exchange rates and lower fees with faster transfer times compared to traditional banks.

3. Exchange Houses

UAE Exchange and Al Ansari Exchange are popular for their widespread presence and efficient services, often providing good rates and fast transfers.

4. Direct Bank-to-Bank Services

Several Indian banks have specialized NRI remittance services:

ICICI Money2India: Offers competitive exchange rates with an AED 12 fee per transaction and 256-bit encryption security
HDFC IndiaLink: Quick credit within 2 hours
Axis Bank Wire Transfer: Credit within 24 hours for non-Axis Bank beneficiaries through RTGS/NEFT/IMPS

Which Method Should You Choose?

For large amounts like EOSB (often AED 50,000-200,000), we recommend:

Best approach: Compare rates between your UAE bank and 2-3 online services on the day of transfer. Even a 0.5% difference in exchange rate can mean thousands of rupees saved on a large EOSB amount.

👉 Tip: Track the Rupee vs Dollar exchange rate using our real-time tracker to time your transfer better.

The Critical Question: Tax Implications in India

This is where most NRIs get confused, and honestly, it's the most important section of this article. Let's break it down clearly.

Is EOSB Taxable in India?

Yes and no-it depends on your residential status.

Here's what matters:

If you're still an NRI when you receive and transfer your EOSB:

Your salary and gratuity earned in the UAE (for services rendered in the UAE) is taxable only in the UAE if you're present in the UAE for over 183 days during a financial year. Since the UAE currently has no personal income tax, this income is effectively tax-free.

When you transfer this money to India, gifts sent to family members (parents, spouse, siblings, children) are tax-free. Money sent to anyone else is taxed as income if the amount exceeds ₹50,000 in a year.

If you return to India and become a resident:

The change from non-resident to resident status will obligate you to pay taxes on your global income, including end-of-service benefits such as gratuity.

Here's the key insight: NRIs planning to return to India should time their journey during the last two months of the financial year (February or March), in which case they will retain NRI status for one year and RNOR (Resident but Not Ordinarily Resident) status for one more year.

RNOR Status Advantage:

During the RNOR period (typically 2 years), foreign income earned before returning to India won't be taxed. After two years, global income becomes taxable in India.

Use our Residential Status Calculator to determine your current status and plan your return accordingly.

Understanding India-UAE DTAA Benefits

The Double Taxation Avoidance Agreement between India and UAE, signed in 1993, ensures that persons who are residents of India, the UAE, or both are saved from being taxed twice.

Salary income is taxable only in the UAE if the employee is in the UAE for over 183 days during a financial year. Since the UAE currently has no personal income tax, salary earned in the UAE is tax-free, provided residency requirements are fulfilled.

Important: To claim DTAA benefits, you must obtain a Tax Residency Certificate (TRC) from UAE authorities and submit it along with Form 10F when filing your Indian tax return.

Gratuity Taxation: India vs UAE

While UAE doesn't tax gratuity, India has specific rules:

Under Indian law, private sector employees can claim up to ₹20 lakhs tax-free under Section 10(10) of the Income Tax Act.

If total gratuity received exceeds ₹20 lakhs, the extra amount is added to taxable income and taxed as per your income slab. This ₹20 lakhs limit applies across all employers throughout your career.

For UAE EOSB transferred while you maintain NRI status, this Indian gratuity exemption may not directly apply since the income source is foreign employment. Consult a tax advisor for your specific situation.

👉 Tip: Keep all documentation-employment contract, salary slips, EOSB payment proof, and bank transfer receipts. You'll need these for tax filing and to prove the source of funds.

NRE vs NRO Account: Where Should Your EOSB Land?

This is a crucial decision that affects taxation and repatriation.

NRE Account (Non-Resident External)

Best for: Money earned outside India

Tax treatment: Interest earned on NRE accounts is tax-free, and both principal and interest are fully and freely repatriable

Perfect for EOSB: Yes, this is the ideal account for your UAE gratuity

Repatriation: Unlimited and free

Exchange Rate Strategy: Timing Your Transfer

Your EOSB might be worth AED 80,000, but the final rupee amount depends entirely on the exchange rate on the day you transfer.

Let's see the impact:

If AED 1 = ₹22.50: AED 80,000 = ₹18,00,000 If AED 1 = ₹23.00: AED 80,000 = ₹18,40,000

That's a ₹40,000 difference just based on exchange rate timing.

Exchange rate strategies:

Track trends: Use our Rupee vs Dollar Tracker to monitor AED-INR movements over 30-90 days
Don't try to time perfection: If you're getting a reasonable rate, transfer at least 50-70% and consider splitting the rest over 2-3 months
Lock rates: Some services offer rate-locking for 24-48 hours-useful for large amounts
Consider currency hedging: For amounts above AED 200,000, professional currency hedging might make sense

The rupee has historically shown volatility against the dirham. Over the past decade, the INR has generally depreciated against foreign currencies, making USD-denominated investments increasingly attractive for long-term wealth preservation.

What To Do With Your EOSB Money Once It Reaches India

You've transferred your EOSB to India successfully. Now comes the most important decision: What should you do with this money?

Most NRIs make one of these mistakes:

Leaving it in a regular savings account (earning 3-4% while inflation eats 6-7%)
Putting everything in traditional NRE Fixed Deposits without comparing rates
Investing randomly based on WhatsApp forwards

Here's a smarter approach:

Create Three Buckets

Bucket 1: Emergency Fund (10-15%)

Keep this amount in a high-interest NRE savings account for immediate access. Best NRE savings accounts currently offer 3-4% interest.

Also Read -Best NRE Savings Accounts for UAE NRIs - Complete Guide

Bucket 2: Safe, Tax-Free Returns (60-70%)

This is where GIFT City comes in.

Why GIFT City USD Fixed Deposits Are Perfect for EOSB

GIFT City (Gujarat International Finance Tec-City) is India's first International Financial Services Centre (IFSC), and it offers unique advantages for NRIs:

USD-denominated deposits: Your money stays in dollars, protecting against rupee depreciation
Tax-free interest: Interest earned in GIFT City is tax-free for specified periods
Higher rates: Currently offering around 4.5-5.6% per year on USD deposits-significantly higher than UAE banks (1-2%)
Easy repatriation: Funds in GIFT City are freely repatriable
Safety: Deposits up to USD 100,000 per bank are insured

Instead of converting your entire EOSB to rupees immediately, you can:

Keep it in USD through GIFT City FDs
Earn higher, tax-free returns
Protect against currency fluctuation
Access funds anytime you need

Learn more about GIFT City investments for NRIs and compare GIFT City FD rates vs traditional NRE/NRO FDs.

Current GIFT City USD FD rates (as of October 2025):

Tenure	Interest Rate (p.a.)
6 months	4.75% - 5.00%
1 year	5.00% - 5.25%
2 years	5.15% - 5.40%
3 years	5.25% - 5.50%

Compare live rates using our NRI FD Rate Comparison Tool.

Bucket 3: Growth & Wealth Building (20-30%)

Once you've secured the majority of your EOSB in safe instruments, allocate the remaining portion to:

Mutual funds for NRIs (equity and hybrid)
Alternative Investment Funds (AIFs) in GIFT City
Best investment options for NRIs

👉 Tip: Start with GIFT City USD FDs for the bulk of your EOSB. These offer the perfect balance of safety, returns, and liquidity while you take time to plan longer-term investments.

Also Read - Best Monthly Investment Plans in UAE

NRI Tax Filing: Do You Need to File ITR?

Even if your EOSB isn't taxable, you might still need to file an Income Tax Return (ITR) in India if:

Your total Indian income exceeds ₹2.5 lakhs in a financial year
You have rental income from Indian property
You've earned capital gains from selling property or investments
You want to claim refunds for TDS deducted

The ITR filing deadline for FY 2024-25 has been extended to 15th September 2025.

Which ITR form to use:

ITR-2 if you don't have income from business or profession
ITR-3 if you earn income from a business or profession in India

Learn about NRI taxation rules and common tax filing mistakes to avoid penalties.

For professional help with ITR filing, join our WhatsApp Community where tax experts answer questions daily.

Common EOSB Transfer Mistakes to Avoid

After helping thousands of NRIs, we've seen these mistakes repeatedly:

1. Converting everything to INR immediately

Once you convert to rupees, you're locked into that exchange rate. Consider keeping a portion in USD through GIFT City FDs.

2. Transferring to the wrong account type

Transferring EOSB to an NRO account instead of NRE means you'll pay unnecessary tax on interest and face repatriation limits.

3. Not timing your return to India strategically

Returning in February-March gives you an extra year of tax benefits through RNOR status.

Also Read -The Complete NRI Status Guide for UAE Residents

4. Missing documentation

Keep employment contracts, salary slips, EOSB certificates, and transfer receipts for at least 7 years. You'll need them for tax filing and proving fund sources.

5. Not declaring foreign assets

NRIs filing ITR-2 must report their assets and liabilities if gross taxable income exceeds ₹1 crore.

6. Ignoring DTAA benefits

Many NRIs don't claim available benefits under India-UAE DTAA. Get a Tax Residency Certificate from UAE and submit Form 10F with your ITR.

7. Falling for "guaranteed high returns" schemes

Your EOSB is hard-earned money. Don't risk it on unregulated schemes promising 12-15% returns. Stick to regulated options like GIFT City FDs, bank FDs, and mutual funds.

Also Read - Comparing Indian Mutual Funds vs UAE Mutual Funds

Your EOSB Transfer & Investment Checklist

Before leaving UAE:

Confirm final EOSB amount with employer
Verify calculation is correct
Ensure payment is received in your UAE bank account
Obtain EOSB certificate from employer
Get Tax Residency Certificate from UAE if planning to claim DTAA
Check and update your UAE bank's India remittance limits

For transfer:

Compare rates across 3 transfer methods
Open NRE account if you don't have one
Track exchange rates for optimal timing
Keep all transfer documentation and receipts
Verify funds have been credited to your Indian NRE account

Also Read -How to Open an NRI Account Online from the UAE

After transfer:

Don't rush into investments-take time to plan
Calculate your residential status
Explore GIFT City USD FDs for tax-free, USD-denominated returns
Compare FD rates across banks
Consider diversification into mutual funds and AIFs
File ITR if required, claiming all applicable deductions
Join investment communities for ongoing guidance

How Belong Can Help

At Belong, we've built a complete platform specifically for NRIs to make smarter financial decisions.

What we offer:

GIFT City USD Fixed Deposits: Earn 4.5-6%+ tax-free returns in USD with deposits starting from just $1,000. Your EOSB can work harder without currency risk. Learn more.
Expert guidance: Connect with SEBI-registered investment advisors who understand NRI taxation and cross-border finance
Comparison tools: Use our FD Rate Explorer to compare rates across NRE, NRO, FCNR, and GIFT City FDs instantly
Compliance support: Access our Compliance Compass to ensure you're meeting all regulatory requirements
Community support: Join 10,000+ NRIs in our WhatsApp Community for daily discussions on investments, taxation, and returning to India

Your EOSB represents years of hard work in the UAE. Let's make sure it works hard for you in return.

Download the Belong App and explore GIFT City investment options today.

Ready to Make Your EOSB Work Smarter?

Your End-of-Service Benefits are more than just money-they're the reward for years of dedication, sacrifice, and being away from home.

Don't let confusion, bad advice, or poor planning reduce the value of what you've earned.

Whether you're returning to India, planning to stay in the UAE longer, or exploring other opportunities globally, the decisions you make now with your EOSB will impact your financial future for decades.

Take these three steps today:

Calculate your correct EOSB amount using the formulas in this guide
Compare transfer methods and exchange rates to maximize the rupee value
Explore GIFT City USD FDs as a safe, tax-free option for your transferred funds

At Belong, we're here to guide you through every step.

Download the Belong App • Join Our WhatsApp Community • Compare GIFT City FD Rates

Have questions? Our team of financial experts is ready to help. Because when it comes to your hard-earned EOSB, you deserve advice you can trust.

Sources:

Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. Tax laws are subject to change, and individual circumstances vary. Consult with a qualified tax advisor or SEBI-registered investment advisor before making financial decisions. Belong and its team are not liable for any financial decisions made based on this content.

UAE End-of-Service Benefits - How to Transfer and Use Them in India