RNOR: A Golden Tax Window for NRIs Returning to India

Know how you can claim RNOR status and lower your tax burden after moving back to India

- Anil Poste

Picture this, you're a non-resident Indian (NRI), who's decided to return to India for good. Here's the good news; before you transition into a full-fledged resident for tax purposes, there exists a golden window that can help you save significantly on taxes.

It's the RNOR (resident but not ordinarily resident) status. In this phase, the foreign income isn't taxed in India, said Ankur Choudhary, co-founder & CEO, Belong, NRI Savings and Investments.

Mint breaks down what RNOR means, how to claim it, and the smartest ways to manage your money during this tax-friendly phase.

What is RNOR?

RNOR is an intermediate tax status under India's income-tax, designed for individuals who return to India after a long stint abroad. "The RNOR status acts as a buffer, a soft landing if you will, allowing returning NRIs to resettle without the burden of immediate global taxation," said Mukund Lahoty, co-founder, Turtle Financial Services.

Raj Ahuja of Turtle Finance said, "RNOR bridges the gap between a non-resident and a full resident. While the individual is a resident for the purposes of stay in India, their global income, from foreign pensions, bank interest, or capital gains, is not taxed unless it is received or accrued in India or from a business controlled from India."

Who qualifies as an RNOR?

There are two key conditions under which a returning Indian can qualify as an RNOR. "You'll be an RNOR if you were a non-resident in nine out of 10 preceding financial years, or if you've spent less than 729 days in India in the past seven years. If either condition is met, you're RNOR," explained Lahoty.