India’s Harsh Crypto Tax Landscape for Returning NRIs

India’s Budget 2025 reaffirmed its hostile stance toward cryptocurrencies. For both residents and returning NRIs, crypto assets are treated with maximum tax severity:

• Flat 30% tax on gains
• 1% TDS on transactions
• No offset of losses across tokens or other capital assets
• State-level levies in addition to central tax (see our detailed Budget 2025 crypto tax guide for NRIs

For NRIs planning to return, selling crypto in India could erode 35–40% of portfolio value. This is why the UAE often emerges as the preferred “exit route” for nri returning to india.

UAE: From Tax Haven to Transparent Regulator

Historically, the UAE was the world’s safest crypto tax haven — zero income tax and no capital gains. This attracted thousands of NRIs and global investors to relocate or route crypto transactions via Dubai and Abu Dhabi.

But things are changing.

In September 2025, UAE officially adopted the OECD Crypto-Asset Reporting Framework (CARF).

What CARF Means for Investors

• 2025–2026: Drafting and consultation of detailed rules.
• Jan 2027: UAE exchanges, brokers, custodians, and wallet providers start reporting.
• 2028: UAE will automatically share crypto account details (balances, trades, identities) with other countries — including India.

So while UAE still has zero income tax, the era of total secrecy is over.

The Myth of “Permanent UAE Comfort”

We see a rising trend among clients:

• Returning NRIs considering a UAE Golden Visa or residency route.
• The idea: retain crypto assets long term in UAE wallets, become UAE tax resident, and “escape” India’s 30% regime.

But here’s the catch:

• Once CARF kicks in, UAE will report all crypto data to Indian tax authorities if you are deemed Indian resident or if you later shift back.
• Long-term holding in UAE does not guarantee immunity — India can still tax those assets depending on your residential status under the Indian Income Tax Act.
• Even if UAE does not tax, the transparency shift means India will know what you hold and can question capital inflows later.

Simply put: UAE is a great short-term liquidation zone, but not a “forever comfort plan.”

Smarter Crypto Strategies for NRIs

If you are an NRI with significant crypto holdings, here’s what matters:

Don’t Wait Too Long

• Liquidating before full CARF exchange in 2028 may still be easier.
• The longer you wait, the tighter the compliance net.

Residency Planning is Key

• Understand how India’s RNOR (Resident but Not Ordinarily Resident) status works.
• Carefully structure when and where you sell.

Document Every Move

• Maintain purchase records, wallet transfers, sale receipts to defend your tax position.

Advisory Support

• At Dinesh Aarjav & Associates, we guide NRIs on:
• Cross-border crypto liquidation planning
• UAE residency structuring
• FEMA and Indian Income Tax compliance
• Protecting gains while staying compliant with future CARF reporting

Conclusion: Don’t Bet on UAE as a Long-Term Escape

India’s crypto taxation is harsh, and UAE still offers a valuable window for NRIs. But with CARF adoption, the dream of parking assets indefinitely in UAE for tax-free comfort is fading.

If your long-term plan is to retain crypto while becoming UAE resident, know that global transparency will catch up.

The smartest approach? Plan now, structure early, and seek expert guidance before tax authorities do.

Contact Dinesh Aarjav & Associates to design an NRI tax planning and crypto tax strategy that works across India, UAE, and other jurisdictions.