From RNOR to resident: tax rules NRIs must prepare for

How to use the two-three year window that allows repatriation of assets without paying taxes

- Anagh Pal

Rahul Fernandes, 43, moved back to Mumbai after living in California for nine years, where he worked at multinational companies. Before returning, he learned about 'resident but not ordinarily resident' (RNOR) status, which helps with taxes when bringing money to India for 2-3 years. Fernandes discussed his taxes with tax and investment advisors well in advance, so he had a clear idea of how things would play out on his return.

Here, we explore the key tax strategies non-resident Indians (NRIs) should know about to ensure a smooth financial transition when moving back to India.

RNOR benefits
When you move back, the first thing to get right is your residential status under Indian tax law. "This isn't about your visa or citizenship status; it's simply a question of days spent in India," said Raj Ahuja, co-founder of Turtle Finance, a financial planning platform.

A person qualifies as ROR (resident and ordinarily resident) or RNOR if they are in India for at least 182 days in a financial year, or 60 days in the current fiscal and 365 in the preceding four.

"Also, if an individual has been a resident in at least two of the preceding 10 financial years, or has stayed in India for 730 days or more in the preceding seven fiscals, they will be treated as ROR; otherwise, they will be classified as RNOR," says Priyal Goel Jain, partner and NRI desk head - Dinesh Aarjav & Associates, Chartered Accountants.

Bridge period