Management Fees from an Indian Subsidiary to a UAE Parent in 2026

Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.

An Indian subsidiary's management fee to its UAE parent is fees for technical services under section 9(7) of the Income Tax Act, 2025. The India UAE DTAA has no article on such fees, so Article 7 applies. India can tax the fee only through a permanent establishment. With a UAE tax residency certificate and Form 41, TDS is nil. The subsidiary still pays 18 percent reverse charge GST and must prove the services gave a benefit.

This page covers income tax, GST, transfer pricing and FEMA for a management fee paid to a UAE parent. It states the law on 23 Oct 2026 and ends with a worked example, a checklist and FAQs.

How are management fees from India to a UAE parent taxed?

Three regimes look at the same fee. Income tax asks whether India may tax the parent and whether the subsidiary must deduct TDS. GST asks whether the subsidiary owes reverse charge. Transfer pricing asks whether the fee is at arm's length and whether the subsidiary received anything for it.

Question	Law	Usual answer for a UAE parent with no Indian PE
Is the fee Indian income of the parent under domestic law?	Section 9(7)(a)(ii) and 9(7)(b), Income Tax Act, 2025	Yes, a managerial or consultancy fee paid by a resident is deemed to arise in India
Does the treaty let India tax it?	Articles 7, 12 and 22, India UAE DTAA; section 159	No, unless the parent has a PE in India and the fee is attributable to it
Must the subsidiary deduct TDS?	Section 393(2), Table serial 17	Nil, if the treaty claim is documented
Which remittance forms apply?	Rule 220, Income Tax Rules, 2026	Form 145, usually Part C with a Form 146
Does GST apply?	Section 5(3) and section 13(2), IGST Act	Yes, 18 percent IGST under reverse charge
Is the fee deductible for the subsidiary?	Section 34(1) and Chapter X (sections 161 to 173)	Only to the extent it is at arm's length and the services were received
Does the UAE tax the fee?	Federal Decree Law No. 47 of 2022	9 percent on a mainland parent; 0 percent for a QFZP providing qualifying headquarter services

The income tax answer is better for the group than under most of India's treaties. The transfer pricing answer is usually where the cost sits. Officers focus on the fee because the treaty takes withholding off the table.

Does the India UAE DTAA have a fees for technical services article?

No. The India UAE DTAA has no article on fees for technical or included services. It was signed on 29 Apr 1992 and amended by protocols of 2007 and 2012. Article 12 covers royalties only. A management fee therefore falls under Article 7 on business profits, which India taxes only through a PE.

The treaty text on incometaxindia.gov.in shows how each article treats a fee from the Indian subsidiary:

Article	What it covers	How a management fee fits
5	Permanent establishment, including a services PE after more than 9 months in any twelve month period	Decides whether India can tax at all
7(1)	Business profits "taxable only in that State" unless carried on through a PE	The home for a management fee
9	Associated enterprises; profits adjusted to arm's length	Lets India test the fee's price
12(3)	Royalties, including "information concerning industrial, commercial or scientific experience"	Catches a fee that hands over know how, at 10 percent
14	Independent personal services, with a fixed base or a stay of 183 days or more	Relevant only to an individual or professional firm
22(1)	Other income "taxable only" in the country of residence	A fallback for income no other article covers

Most of India's treaties are different. The India Singapore, UK and US treaties let India tax technical fees at source at 10 or 15 percent. The UAE treaty gives India no such right. Our guide to the India UAE DTAA covers the rest of the treaty.

Watch the royalty boundary. Some fees pay for process manuals, pricing models or playbooks that the Indian team keeps and reuses. That content can be "information concerning industrial, commercial or scientific experience". That part is a royalty under Article 12, taxable at 10 percent. We split such content into a separate licence where it exists.

Three treaty access conditions apply to every claim:

1. The parent must be a UAE resident under Article 4(1)(b): incorporated in the UAE and "managed and controlled wholly in UAE".
2. The Multilateral Instrument's principal purpose test replaced Article 29 for Indian taxes from 1 Apr 2020. The arrangement must not have treaty benefit as one of its principal purposes.
3. Section 159(8) of the Income Tax Act, 2025 needs a tax residency certificate from the UAE and Form 41 (old Form 10F).

When can India tax the fee through a permanent establishment?

India can tax the parent's profit on the fee only if the parent has a PE in India and the fee is attributable to it. Article 5 of the treaty lists the triggers. For a management fee, the risk comes from the parent's people, not from the payment itself.

The triggers we test for a UAE parent are:

1. Fixed place PE under Article 5(1) and 5(2). A parent executive who uses a room in the Indian office as their own base can create one.
2. Services PE under Article 5(2)(i). It arises when the parent furnishes services, including consultancy, in India on the same or a connected project. The test is more than 9 months in aggregate within any twelve month period.
3. Dependent agent PE under Article 5(4). It arises when someone in India habitually exercises authority to conclude contracts for the parent.

The 9 month test counts days that parent staff spend in India on the work. Management delivered from Dubai by email and video calls does not count. A regional CFO who spends most of the year in Gurugram running the Indian finance team can cross it.

If a PE exists, Article 7 lets India tax the profit attributable to it at 35 percent plus surcharge and cess. The parent then files an Indian return for that profit. Our guide on how to avoid permanent establishment risk sets out the controls. Our guide to seconding employees to India covers staff who move to India for longer.

What is the TDS position on a management fee to a UAE company?

The fee is taxable under domestic law. So section 393(2), Table serial 17, of the Income Tax Act, 2025 requires TDS at the rates in force. Section 159 lets the parent use the treaty where it is more beneficial. With no PE, Article 7 gives India no right to tax, so the subsidiary deducts nothing.

The domestic charge has two parts. Section 9(7)(a)(ii) deems fees for technical services payable by a resident to arise in India. Section 9(7)(b) defines them as consideration for "any managerial, technical or consultancy services". A group management fee fits that definition. The rate for a non resident is 20 percent under section 207(2), plus surcharge and 4 percent cess.

Scenario	TDS rate	What the subsidiary needs
UAE parent, no PE, treaty documents on file	Nil under Article 7	TRC covering the payment date, Form 41, no PE declaration, Form 146
UAE parent, no TRC or no Form 41	20% plus surcharge and cess (20.8% up to INR 1 crore of income; 21.216% above INR 1 crore)	Deduct at the domestic rate; the parent claims any excess in its Indian return
UAE parent with a PE, fee attributable to it	Rate in force under section 393(2), unless a certificate in Form 128 fixes a lower amount; the parent pays 35% plus surcharge and cess on the attributable profit in its return	Form 128 application by the parent under section 395
Part of the fee is a royalty under Article 12	10% on that part	Split invoice or licence, beneficial ownership declaration
No PAN and none of the rule 217 details	Highest of the rate in the provision, the rate in force and 20%, under section 397(2)(b)(i)	PAN, or the four rule 217 details: name, email and phone; foreign address; TRC; foreign tax identification number

Our guide to TDS on payments to non residents covers the section 393 mechanics.

Where TDS applies, the subsidiary deposits it by the 7th of the next month, or by 30 April for March, under rule 218(2). It reports the payment in Form 144 (old Form 27Q) each quarter and issues Form 131 (old Form 16A). Section 398 charges interest of 1 percent a month for late deduction and 1.5 percent a month for late deposit.

Who files a return in India is a separate question. Section 207(8) exempts a non resident from filing only where tax was withheld at the section 207 rate. A UAE parent paid without TDS under a treaty claim falls outside that exemption.

Section 263(1)(a) of the Income Tax Act, 2025 lists "a company" among the persons who must file a return for each tax year. Section 263(1)(b) requires a company to file regardless of income or loss. The section has no carve out for a foreign company whose fee is relieved by a treaty. Section 263(3) lets the government exempt a class of persons by notification. Check the CBDT notifications on incometaxindia.gov.in before the parent decides not to file.

In our reading, the safer course is for the UAE parent to file. We ask the parent's advisers to confirm the position each year, in writing.

Which Form 145 and Form 146 parts apply to the remittance?

From 1 Apr 2026, Form 145 replaced Form 15CA and Form 146 replaced Form 15CB. A management fee to a UAE parent is charged by the Act and relieved by the treaty. We file Form 145 Part C with a Form 146 from a chartered accountant, which records the treaty article relied on.

Rule 220(2) of the Income Tax Rules, 2026 sends "any sum which is not chargeable under the Act" to Part D. Some practitioners use Part D for treaty exempt fees. We do not, because section 9(7) does charge the fee. Part C with a Form 146 puts the accountant's treaty analysis on record before the money leaves India.

The accountant examines four points before signing Form 146:

1. The TRC covers the date of payment. A UAE calendar year certificate needs a second certificate for January to March.
2. Form 41 is filed for the tax year.
3. The no PE declaration and the day counts of parent staff in India.
4. The service agreement and invoice, to separate any royalty element.

One Form 146 supports one Form 145. A subsidiary that remits quarterly needs four certificates a year. Our guide to Forms 145 and 146 covers the portal steps. Our note on Form 41 and the tax residency certificate covers the treaty documents.

How does GST reverse charge apply to a management fee?

The fee is an import of services. The parent is outside India and the subsidiary is in India. The place of supply is the recipient's location under section 13(2) of the IGST Act. The subsidiary pays 18 percent IGST under reverse charge, in cash, and claims it as input tax credit.

The GST mechanics follow the rules for any service from a foreign related party:

1. Time of supply: the earlier of the booking date and the payment date, for associated enterprises abroad. The second proviso to section 13(3) of the CGST Act sets this. A March accrual makes the tax due in the March GSTR-3B.
2. Value: the invoice value counts as open market value where the subsidiary is eligible for full input tax credit. The second proviso to rule 28(1) of the CGST Rules sets this.
3. Self invoice: issued within 30 days of receiving the service under rule 47A.
4. Return: tax in Table 3.1(d) and credit in Table 4(A)(2) of GSTR-3B.

Where the subsidiary makes exempt supplies, part of the credit is lost. The reverse charge then becomes a real cost. Circular No. 210/4/2024-GST of 26 Jun 2024 allows a nil value for a free service from a related party. It needs full input tax credit and no invoice. A billed management fee never qualifies for nil value.

Two links matter. The GST value and the transfer pricing value should match, because officers compare GSTR-3B with Form 48. Also, an exporting subsidiary recovers the reverse charge only through a refund. Our guides to reverse charge on import of services and GST refunds for exporters cover both.

What is the benefit test for intra group services?

The benefit test asks whether an independent company in the subsidiary's position would pay for the service, or do it itself. Chapter VII of the OECD Transfer Pricing Guidelines sets this test. Indian officers apply it to management fees even though the Income Tax Act, 2025 does not use the word "benefit".

The test sorts the parent's activities as follows:

Activity	Typical examples	Chargeable to the Indian subsidiary?
Shareholder activity	Group board meetings, investor relations, the parent's own audit and consolidation, raising capital for the parent	No
Duplicated activity	A group review of work the Indian team already does in full, with no added value	No
Service with benefit	Group IT systems the subsidiary uses, HR policies and payroll tools, treasury management, regional sales support, legal review of Indian contracts	Yes, at arm's length
Incidental or passive association	Better credit terms because the subsidiary belongs to the group	No
On call services	A standing right to use group experts when needed	Only if an independent party would pay for the stand by right

The burden of proof sits with the subsidiary in practice. Officers ask for evidence that each service was rendered, that India needed it, and that it did not duplicate local work. Without that evidence they set the arm's length price at nil.

The OECD Guidelines offer a simplified approach for low value adding services with a 5 percent markup. Indian law has no equivalent rule, and India's safe harbour rules do not cover payments for services received. We use the OECD approach only as supporting analysis, never as the sole basis.

Our guide to what Indian courts accept on management fees covers the Delhi High Court's view that emails proving a service do not prove its price.

What documents support the fee for transfer pricing?

Section 171 of the Income Tax Act, 2025 requires the subsidiary to keep information and documents on each international transaction. Section 172 requires Form 48 (old Form 3CEB) from an accountant. For a management fee, the file must prove the service as well as the price.

Document	Why officers ask for it	Who prepares it
Intra group service agreement, signed before the services begin	Defines the services, the cost pool, the allocation key and the markup	Parent and subsidiary
Description of each service line with the Indian need it meets	Shows the benefit, service by service	Subsidiary finance team
Cost pool working for the year, with shareholder costs removed	Supports the base on which the fee is calculated	Parent finance team
Allocation key and its data (headcount, revenue, users, tickets)	Shows India's share is reasonable	Parent finance team
Evidence of delivery: emails, reports, minutes, system access logs, timesheets	Proves the service was rendered	Both, collected through the year
Benchmarking of the markup	Supports the arm's length markup on cost	Transfer pricing adviser
Board approval and related party disclosure	Shows the contract was approved under section 188 of the Companies Act, 2013 where it applies	Subsidiary company secretary
Form 48, filed one month before the return due date	Statutory report under section 172 and rule 85	Chartered accountant

Evidence collected at the year end rarely persuades. We set up a quarterly folder per service line and ask the parent to drop in delivery evidence as it arises. Our guide to transfer pricing documentation covers the full local file.

Section 442 of the Income Tax Act, 2025 charges a penalty for failing to keep these documents or reporting them wrongly. It is 2 percent of the value of each international transaction. For a fee of INR 3,78,00,000 that is INR 7,56,000.

How is the arm's length price of a management fee set?

Most groups charge cost plus a markup: the parent's cost of the services, allocated to India by a key, plus a margin. The transaction must be priced under one of the methods in Chapter X and the rules. Our guide to arm's length price methods explains the six methods.

Indian officers and advisers usually apply one of three approaches:

1. Comparable uncontrolled price, where the parent sells the same service to third parties or buys it from them. This is rare for group management services.
2. Transactional net margin method at the parent's end, testing the markup on the parent's cost against independent service providers.
3. Testing the fee as part of the subsidiary's overall margin, where the services are closely linked to its main activity. Officers often resist this aggregation.

The method only fixes the price. It does not cure a failed benefit test. An officer who finds no evidence of services can still propose nil, whatever the benchmarking says.

For a large recurring fee, an advance pricing agreement under section 168 gives certainty for up to five years. A bilateral APA with the UAE runs through Article 27, the treaty's mutual agreement procedure.

What disallowance risks does the subsidiary face?

The subsidiary carries most of the risk on a management fee. It loses the deduction, pays tax on the adjustment and may face a secondary adjustment. The parent, with no PE, rarely faces any Indian tax on the same fee.

Risk	Provision (Income Tax Act, 2025)	Old provision (1961 Act)	Trigger	Effect
Transfer pricing adjustment	Sections 161 to 173	Sections 92 to 92F	No benefit, duplication or excess markup	Fee reduced, often to nil; tax at the subsidiary's rate
Disallowance for no TDS	Section 35(b)(ii)	Section 40(a)(i)	TDS was due but not deducted or paid	Full fee disallowed until TDS is paid
General deduction denied	Section 34(1)	Section 37(1)	Expense not wholly and exclusively for the business, or capital in nature	Fee disallowed in full or part
Secondary adjustment	Section 170	Section 92CE	Primary adjustment of INR 1 crore or more	Excess treated as an advance to the parent with interest, or 18 percent additional tax
Documentation penalty	Section 442	Section 271AA	Documents not kept, or wrong	2 percent of the transaction value
Treaty claim fails	Section 159(8); MLI principal purpose test	Section 90(4)	No TRC, no Form 41, or treaty shopping	TDS at 20 percent plus surcharge and cess, with interest under section 398

The section 35(b)(ii) risk is real only where TDS was due. If the treaty position fails because the TRC was missing, TDS was due all along. The subsidiary then loses the deduction for that year and pays interest. We treat a missing TRC as a stop on the remittance.

The secondary adjustment catches groups by surprise. Under section 170 the excess fee must come back to India within the time the rules prescribe. Otherwise it becomes a deemed advance to the parent, with interest. Section 170(5) allows the subsidiary to pay additional income tax at 18 percent on the unrepatriated amount instead.

What FEMA and bank checks apply to the remittance?

A management fee is a current account transaction. The subsidiary pays through its AD Category I bank with the Form 145 acknowledgement and, for Part C, the Form 146. The bank also applies FEMA limits and the purpose code for business and management consultancy, S1006.

One FEMA limit deserves attention. Schedule III to the Current Account Transactions Rules, 2000 caps remittances for consultancy services procured from outside India. The cap is USD 1,000,000 per project, or USD 10,000,000 per project for infrastructure. RBI's FAQ on the Liberalised Remittance Scheme (Q24, updated 6 Apr 2023) says anything above these limits needs prior RBI approval.

AD banks differ on whether a recurring group management fee is a "consultancy service" for this cap. We raise it with the bank before the first large remittance and keep its view on file. A transaction of INR 50 crore or more also needs the subsidiary's Legal Entity Identifier.

Our guide to RBI purpose codes lists the codes for each type of payment to a parent.

How does UAE corporate tax treat the fee?

The UAE taxes the parent's fee income under Federal Decree Law No. 47 of 2022. A mainland parent pays 9 percent on taxable income above AED 375,000. A Qualifying Free Zone Person pays 0 percent on qualifying income. Headquarter services to related parties are a qualifying activity.

Four UAE points matter for an India fee:

1. Ministerial Decision No. 229 of 2025, dated 28 Aug 2025, lists "Headquarter services to Related Parties" as a qualifying activity in Article 2(1)(i). It repealed Ministerial Decision No. 265 of 2023.
2. A QFZP must keep non qualifying revenue within the de minimis limit in Article 3 of the same decision. The limit is 5 percent of total revenue or AED 5,000,000, whichever is lower.
3. UAE law applies its own arm's length principle to related party transactions. The UAE side wants the fee to be high enough, while India wants it low enough.
4. The UAE domestic minimum top up tax of 15 percent under Cabinet Decision No. 142 of 2024 applies to groups with global revenue of EUR 750 million or more in at least two of the four preceding financial years. It applies to financial years starting on or after 1 Jan 2025.

India deducts no tax on a treaty protected fee, so the parent has no Indian tax to credit in the UAE. Double tax arises when India disallows the fee while the UAE taxes the income. The route to relief is the mutual agreement procedure in Article 27. Article 17 of the MLI added a corresponding adjustment rule to Article 9. Under the MLI, a case must be presented within three years of the first notice of the action.

A UAE parent setting up or reviewing its Indian subsidiary can start with our guide to company registration in India from the UAE.

What changed in 2026

The Income Tax Act, 2025 replaced the Income Tax Act, 1961 from 1 Apr 2026. When this page was first published on 22 Feb 2026, the 1961 Act still applied. Section 536 of the 2025 Act keeps actions and circulars under the old Act alive where consistent. Fees paid from 1 Apr 2026 use the new sections and forms.

Topic	Old rule (to 31 Mar 2026)	New rule (from 1 Apr 2026)	Instrument
Deeming of FTS paid by a resident	Section 9(1)(vii), 1961 Act	Section 9(7)(a)(ii) and 9(7)(b)	Income Tax Act, 2025
Treaty relief	Section 90; Form 10F	Section 159; Form 41 under rule 75	Income Tax Act, 2025; Income Tax Rules, 2026
TDS on payments to non residents	Section 195; Form 27Q	Section 393(2), serial 17; Form 144	Income Tax Act, 2025
Remittance forms	Forms 15CA and 15CB	Forms 145 and 146	Income Tax Rules, 2026, rule 220
Rate on FTS for non residents	Section 115A, 20 percent	Section 207(2), 20 percent	Income Tax Act, 2025
Disallowance for no TDS	Section 40(a)(i)	Section 35(b)(ii)	Income Tax Act, 2025
General deduction	Section 37(1)	Section 34(1)	Income Tax Act, 2025
Transfer pricing	Sections 92 to 92F; Form 3CEB	Sections 161 to 173; Form 48 under section 172	Income Tax Act, 2025
Secondary adjustment	Section 92CE	Section 170	Income Tax Act, 2025
Documentation penalty	Section 271AA	Section 442	Income Tax Act, 2025

The GST position did not change for a management fee from a parent. The Finance Act, 2026 omitted section 13(8)(b) of the IGST Act from 30 Mar 2026, but that rule covered intermediaries, not management services. On 8 Oct 2026 the 57th GST Council recommended e invoicing for imports of services (PIB release, item 18.4). It would cover taxpayers with aggregate annual turnover of INR 5 crore and above. That needs a notification before it applies.

Worked example

A Gurugram subsidiary of a Dubai mainland company provides software services in India. It pays its parent a management fee under a written agreement. We assume INR 24.00 to the UAE dirham. The subsidiary pays tax under section 200 (old 115BAA) at 22 percent plus 10 percent surcharge and 4 percent cess, which is 25.168 percent.

How the fee is built

The parent's head office cost pool for the year is AED 20,000,000. India's share by headcount is 7.5 percent, or AED 1,500,000. A 5 percent markup takes the fee to AED 1,575,000, which is INR 3,78,00,000.

The tax and cash effects

Item	Working	Amount (INR)
Fee	AED 1,575,000 x 24.00	3,78,00,000
IGST under reverse charge, paid in cash	3,78,00,000 x 18%	68,04,000
IGST credit claimed in the same GSTR-3B	Full credit, no exempt supplies	68,04,000
TDS with TRC, Form 41 and no PE	Article 7	Nil
TDS if the TRC is missing	3,78,00,000 x 21.216%	80,19,648
Tax saved by the deduction if fully allowed	3,78,00,000 x 25.168%	95,13,504

What happens if the benefit test fails in part

The parent's pool includes AED 6,000,000 of shareholder costs: the group board, investor relations and the parent's own audit. The officer strips India's share of those costs out. That is 7.5 percent of AED 6,000,000 plus the 5 percent markup: AED 472,500, or INR 1,13,40,000.

The adjustment adds INR 1,13,40,000 to the subsidiary's income. The extra tax is INR 1,13,40,000 x 25.168% = INR 28,54,051 (rounded), before interest. Because the adjustment is above INR 1 crore, section 170 applies. The parent must send INR 1,13,40,000 back to India in the prescribed time. Otherwise the subsidiary can pay additional tax at 18 percent, which is INR 20,41,200.

The fix before the year starts

The group removes shareholder costs from the pool before billing. The chargeable pool becomes AED 14,000,000. India's share is AED 1,050,000, and with the markup the fee is AED 1,102,500, or INR 2,64,60,000. The reverse charge falls to INR 47,62,800. The deduction is now defensible, service by service.

The UAE side

If the parent is a mainland company with other taxable income above AED 375,000, the fee bears 9 percent UAE corporate tax. On AED 1,102,500 that is AED 99,225. The group could move the head office function into a QFZP that meets the conditions. Headquarter services to related parties would then be qualifying income at 0 percent.

Common mistakes

1. Charging a percentage of the subsidiary's revenue with no cost pool. Officers read it as profit stripping. Fix: build the fee from the parent's cost and a stated key.
2. Including the parent's shareholder costs in the pool. Fix: remove group board, investor relations and the parent's own audit and fundraising costs.
3. Signing the agreement after the year has started. Fix: sign before the first service and review the pool each year.
4. Remitting without a TRC that covers the payment date. Fix: ask for the certificate before each tax year and hold the remittance if it is late.
5. Filing Form 145 Part D for a fee the Act charges. Fix: file Part C with a Form 146 that records the Article 7 analysis.
6. Waiting for the parent's invoice to pay reverse charge. Fix: pay the IGST in the month the fee is booked.
7. Collecting delivery evidence only when a notice arrives. Fix: keep a quarterly evidence folder for each service line.
8. Ignoring the secondary adjustment after an adjustment. Fix: decide on repatriation or the 18 percent tax within the prescribed time.
9. Letting parent executives run India from India. Fix: track days and roles against Article 5 and keep decisions in Dubai.

If you want a review of an existing fee, email [email protected] with the agreement, last year's cost pool and Form 48. Our transfer pricing advisory team handles the benchmarking.

Checklist

1. Sign an intra group service agreement before the services begin.
2. List each service line and the Indian need it meets.
3. Remove shareholder and duplicated costs from the parent's cost pool.
4. Fix the allocation key and keep the data behind it.
5. Benchmark the markup and record the method chosen.
6. Obtain the parent's UAE tax residency certificate for each period covering a payment.
7. Ensure the parent files Form 41 for the tax year.
8. Collect a no PE declaration with day counts of parent staff in India.
9. Book the fee each quarter and pay 18 percent IGST under reverse charge in that month's GSTR-3B.
10. Issue the self invoice within 30 days and claim the credit in Table 4(A)(2).
11. Get Form 146 and file Form 145 Part C before each remittance.
12. Confirm the purpose code and the Schedule III position with the AD bank.
13. Keep delivery evidence in a quarterly folder for each service line.
14. File Form 48 one month before the return due date.

Frequently Asked Questions

Is TDS deductible on management fees paid to a UAE company?+

Usually not, if the treaty claim is documented. Section 393(2) of the Income Tax Act, 2025 requires TDS on sums chargeable in India. The India UAE DTAA has no fees for technical services article, so the fee is business profit under Article 7. Without an Indian PE, India cannot tax it, and the TDS is nil.

Does the India UAE DTAA have an FTS clause?+

No. Article 12 of the India UAE DTAA covers royalties only, and no other article deals with fees for technical or included services. A managerial, technical or consultancy fee therefore falls under Article 7, business profits. India can tax it only if the UAE company has a PE in India and the fee is attributable to that PE.

What documents are needed to remit a management fee to a UAE parent without TDS?+

The parent's UAE tax residency certificate covering the payment date, Form 41 filed for the tax year, and a no PE declaration. The subsidiary also needs the service agreement and invoice. A chartered accountant then issues Form 146, and the subsidiary files Form 145 Part C before the bank remits.

Is GST payable on a management fee from a UAE parent?+

Yes. The fee is an import of services, so the Indian subsidiary pays 18 percent IGST under reverse charge under section 5(3) of the IGST Act. It pays in cash through GSTR-3B Table 3.1(d) and claims the credit in Table 4(A)(2). The time of supply is the earlier of booking and payment.

What is the benefit test for management fees in India?+

It asks whether an independent company would pay for each service or perform it itself. Indian officers apply the test from Chapter VII of the OECD Transfer Pricing Guidelines. Shareholder activities, duplicated work and passive group benefits are not chargeable. Without evidence of service and need, officers set the arm's length price at nil.

Can the tax officer disallow a management fee paid to a parent?+

Yes, in three ways. A transfer pricing adjustment under sections 161 to 173 can reduce the fee to arm's length, often nil. Section 34(1) can deny an expense not incurred wholly and exclusively for the business. Section 35(b)(ii) disallows the fee if TDS was due and not deducted or paid.

When does a UAE parent have a permanent establishment in India?+

Under Article 5 of the India UAE DTAA, through a fixed place of business, a dependent agent concluding contracts, or services furnished in India for more than 9 months in any twelve month period. Management delivered from the UAE does not create a services PE. Parent staff working in India for long periods can.

What rate applies if the UAE parent has no tax residency certificate?+

The subsidiary deducts TDS at the domestic rate for fees for technical services. That is 20 percent under section 207(2) of the Income Tax Act, 2025, plus surcharge and 4 percent cess. For a foreign company with income above INR 1 crore the effective rate is 21.216 percent. The parent can claim any excess back through its Indian return.

Which form replaced Form 15CA and 15CB for remittances to a parent?+

Form 145 replaced Form 15CA and Form 146 replaced Form 15CB from 1 Apr 2026, under rule 220 of the Income Tax Rules, 2026. For a management fee charged by the Act but relieved by the treaty, we file Part C of Form 145 with a Form 146 that records the treaty analysis.

Is a management fee a royalty under the India UAE DTAA?+

Not normally. Article 12(3) treats as royalty a payment for "information concerning industrial, commercial or scientific experience". A fee for services performed is business profit. Where part of the fee pays for know how the Indian team keeps and reuses, that part can be a royalty, taxable at 10 percent.

What is a secondary adjustment under section 170?+

It applies when a primary transfer pricing adjustment is INR 1 crore or more. The excess money paid to the associated enterprise must return to India within the prescribed time. Otherwise it is treated as an advance with interest. Section 170(5) lets the taxpayer pay additional income tax at 18 percent instead.

Is a management fee received by a UAE free zone company taxed in the UAE?+

It can be taxed at 0 percent. Ministerial Decision No. 229 of 2025 lists headquarter services to related parties as a qualifying activity for a Qualifying Free Zone Person. The company must meet the QFZP conditions and the de minimis limit of 5 percent of revenue or AED 5,000,000. A mainland company pays 9 percent above AED 375,000.

Does a management fee need RBI approval?+

Usually not, because it is a current account transaction. Schedule III to the Current Account Transactions Rules, 2000 caps consultancy services procured from outside India at USD 1,000,000 per project. RBI's LRS FAQ says amounts above that need prior RBI approval. Banks differ on whether a group management fee counts, so ask the AD bank first.

When is Form 48 due for a subsidiary paying a management fee?+

Rule 85 of the Income Tax Rules, 2026 requires Form 48 one month before the return due date. For a company with international transactions, the return is due on 30 November after the tax year. So Form 48 for tax year 2026-27 is due by 31 Oct 2027.

Can an APA cover a management fee paid to a UAE parent?+

Yes. Section 168 of the Income Tax Act, 2025 provides for advance pricing agreements. A unilateral APA covers only India. A bilateral APA also involves the UAE through the mutual agreement procedure in Article 27 of the treaty. An APA fixes the method or price for future years and can roll back to earlier years.

Sources

• Income Tax Department, India UAE DTAA with protocols, https://www.incometaxindia.gov.in/w/uae-comprehensive-agreements-1
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