# RNOR & Returning NRI Tax Planning

> A returning NRI is usually 'Resident but Not Ordinarily Resident' (RNOR) for up to three financial years. While RNOR, foreign income is not taxed in India unless it comes from a business controlled or a profession set up in India, FCNR deposit interest stays exempt, and Schedule FA isn't required. Planning the date of return and what you realise abroad before becoming ordinarily resident can save significant tax.

Practice: NRI Tax Services — https://www.industax.com/services/nri-tax/

The RNOR window is the most valuable planning period for a returning NRI. Gains on foreign shares, funds or property realised while RNOR are outside Indian tax; after you become ROR, worldwide income and foreign assets come into the Indian net.

On the banking side, NRE and NRO accounts must be redesignated as resident accounts on return under FEMA; FCNR deposits can run to maturity and foreign currency can be held in an RFC account. Foreign retirement accounts in notified countries (the US, UK and Canada) can get relief under Section 89A so that you aren't taxed in India before withdrawal.

We map your foreign assets, model the RNOR years, and sequence actions — sales, transfers, account changes — with your overseas adviser.

## Key facts

| Item | Detail |
| --- | --- |
| RNOR conditions | NR in 9 of 10 preceding years, or ≤ 729 days in India in the preceding 7 years |
| Typical duration | Up to 3 financial years after return |
| Foreign income while RNOR | Not taxed unless from a business/profession controlled from India |
| Foreign retirement accounts | Section 89A relief for notified countries (US, UK, Canada) |
| Schedule FA | Required only once you are ROR |

## Who needs this

- NRIs planning to move back to India
- Professionals returning with foreign stock, 401(k)/IRA, ISA or RRSP accounts
- Families selling foreign property before or after return

## What's included

- Return-date and residency projection
- Foreign asset inventory and sale timing plan
- Bank account redesignation checklist (NRE/NRO/FCNR/RFC)
- Section 89A election and ITR filing during RNOR years

## Documents

- Travel history
- Statements of foreign accounts, investments and retirement plans
- Indian bank account details
- Expected return date

## Process

1. **Project** — Residency status for the next few years modelled.
2. **Plan** — Actions sequenced across the RNOR window.
3. **Execute** — Accounts, sales and filings done in order.

## Also covers

- **RNOR taxation** — How RNOR income is computed and reported in the ITR.

## FAQs

### Is foreign income taxable for RNOR?

No, unless it is derived from a business controlled in India or a profession set up in India.

### What happens to my NRE account when I return?

It must be redesignated as a resident account under FEMA; FCNR deposits can continue until maturity, and foreign currency can be kept in an RFC account.

### Is my US 401(k) taxed in India?

Section 89A lets residents defer Indian tax on income from retirement accounts in notified countries (including the US, UK and Canada) until withdrawal, so it aligns with the foreign country's taxation.

## Official sources

- Income Tax e-Filing portal: https://www.incometax.gov.in/
- Reserve Bank of India — FEMA directions: https://www.rbi.org.in/

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Canonical page: https://www.industax.com/services/nri-tax/rnor-tax-planning
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.