RNOR (Resident But Not Ordinarily Resident) is not very well know even in NRI circles. A few days back when I wrote a post about “status of NRE FD after return to India“ – I got few emails & comments that they have not heard about this.
Surprisingly even bankers don’t provide this information to NRI returning to India after the long stay. This increase tax liability of NRIs which he would have saved legally.
So I thought to cover this in detail including RNOR India tax & also added a calculator.
What is RNOR?
RNOR stands for Resident But Not Ordinarily Resident. It is a residential status given to certain people. Here are the conditions of determining whether a person is RNOR or not –
If the person is a resident Indian, he/she will be given the RNOR status if –
A resident Indian can be given an RNOR status if
- He/She has NOT been a resident in at least 2 out of the last 10 years.
OR
- He/She has been in India for a period of 729 days or less during the last 7 financial years
If the person is an NRI who has just returned to India, he/she will be given the RNOR status if –
- If the NRI has been outside of India for 9 out of the last 10 years, he can be an RNOR for 1 year.
- If the NRI has been in India for a period of 729 days or less during the last 7 financial years, he can be an RNOR for 3 years.
Let us make this simple with an example. Ms. Shweta left for the United States in 2001. She returned to India in June 30th, 2017. She will be considered as an RNOR for the financial year April 2017-March 2018.
What about 2018-2019?
She has been in India from June 30th, 2017 to March 31st 2019. That is a total of 639 days which is less than 729. Therefore she will be treated as an RNOR in the financial year 2018-19.
By March 31st, 2020, she would have been in India for 1005 days and therefore she will be treated as a resident Indian for the financial year 2019-2020.
This flowchart can help you to understand RNOR Status
RNOR Calculator
I don’t think after this explanation any calculator is required but if you still want you can download this simple calculator.
RNOR Tax Benefits
The government gives certain benefits to returning NRIs by making them as RNOR for some time. From a taxation perspective, an RNOR will have a similar status as that of an NRI.
So the person who is an RNOR will have to pay tax only on income received or accrued in India. The income earned abroad will not be taxed. So not ordinarily resident Indian income tax can be sustantially lower
Read – NRI returning to India
Why do NRIs get the RNOR Status?
This helps the NRIs to bring back their financial gains abroad without tax liability. The person with RNOR status does not have to pay tax on –
- Interest on FCNR deposits and NRE deposits if you convert that to RFC.
- Withdrawals from offshore retirement accounts
- Rent received abroad
- Capital gains made abroad
- Interest or dividend received from investments in deposits and securities abroad
Once the NRI becomes a Resident Indian from an RNOR, all income whether earned in India or abroad is taxable unless concessions and exemptions granted under the Double Taxation Avoidance Agreement, if any, between India and the previously residing country, are applicable.
Check your residency status every year so that you are aware of it and pay tax and file returns appropriately
If your status gets converted to Resident Indian, inform the bank so that your bank accounts (NRE and NRO) are designated as resident bank accounts. Your investment accounts should also be converted to resident accounts. The deposit accounts in NRE (but should be converted to resident) and FCNR accounts can be continued till maturity, transferred to Resident Foreign currency accounts or closed down.
“Any income received overseas becomes taxable based on Once your status changes to Resident, all your overseas income becomes taxable.
wiseNRI
Also, you have to intimate your bank about the changed residency status and convert the existing NRI specific accounts to resident rupee accounts.
How change in residential status impact investments
Common Questions asked on RNOR Status
Q.1 I was an NRI for the last 8 years and returned to India for good in October 2018. I have invested in a residential property in Hong Kong where I was residing earlier. I have rented it out and get rental income on it. Should I pay tax for it in India?
Ans. Since you have returned only in October 2018, you have stayed for less than two months in India which means you are an RNOR. The rental income will not be taxable in India for now.
Q.2 Anish went to United States to work in January 2018. For the financial year 2017-18, what status should he use to file the income tax returns?
Ans. Since Anish has stayed less than 182 days in US for the financial year – 2017-18, he should file the income tax returns as a Resident Indian for the financial year 2017-18.
Q.3 Do I have Indian citizenship when I have the status – not ordinarily resident Indian?
Ans. Yes, a person with RNOR status has an Indian passport and therefore is an Indian citizen.
Q.4 Can I get an RNOR status more than once?
Ans. You can get an RNOR status more than once provided you fulfill the conditions that give a person the RNOR status.
What is an RFC account?
An RFC account or Resident Foreign Currency account can be opened by a person who has the status – RNOR. Foreign funds can be brought to India in any currency you wish to and can be deposited in this account. NRE/NRO/FCNR savings accounts and fixed deposits can be converted to RFC accounts and RFC fixed deposits. Any interest that you earn in the RFC account while you have the RNOR status is tax-free in India.
It is useful as you need not to bear the effort and cost of currency conversion. It is easy to transfer these funds abroad if you move to a foreign location again.
I know RNOR is a complex topic – I have tried my best to simplify this. If you still have any questions on Resident but non ordinary resident Indian status – please add in the comment section. Please also share your experiences.
I think the interest income on NRE deposits is taxable for a person claiming NROR status. It is only the FCNR interest which is tax free during the NROR status
Hi RK,
For an NRI, interest earned on NRE deposits is exempt from tax in India. So long as you continue to be an NRI or a resident but not ordinarily resident if you convert that to RFC. (RFC rates are similar to FCNR) Interest income from FCNR is exempt for NRIs and RNOR
Check this https://wisenri.com/nre-fd-after-return-to-india/
Dear Shri Hemant,
First of all, kudos to you for making it crystal clear about RNOR taxability. You clearly say that NRE FD ineterst is also expmpted from income tax as long as RNOR status is there and NRE FD is not matured. Actually many Chartered accountant say that it is only FCNR FD interest is exempted and not NRE FD ineterst. Can you please let me know how do I explain to CA and show him that this is the claus that tells you that NRE FD interest is not taxable for RNOR ?
Thanks and regards,
Balkrishna Kapdi
Dear Shri Hemant, we did not see your reply to above point. Is RNOR need to pay tax on interest earned on NRE FD in INR. Kind regards. Harish
Hi Kruti & Bala,
You can convert NRE FD to RFC if you want tax free returns but interest will be much lower.
Hi Hemant,
Thanks for very informative piece,
I just want to have few clarifications
1. Leaving out the country for more than 182 days will give the status of NRI??
2. Are the Consultants from UN organization exempted form Tax in India
Hi Rehan,
Thanks for appreciating 🙂
Yes, if you are out of India for more more than 182 days – you will be NRI in that year.
There’s no tax on permanent UN employees in India – I am not sure about the status of consultants.
This means that the NRE Fd which has originally been created in Rupees has to be broken when you attain RNOR status and a new FCNR deposit has to be created through RFC account.
Can you continue the same NRE Rupee Fd. Can the proceeds be created in Rupees to you through the RFC account.
Hi Abha,
You can continue NRE FD but that can’t be transferred in RFC.
If a person returns back to India in Oct-18, he will be NRI in FY18-19 (less than 182 days stay in India). Does he have to inform the banks immediately or in April-19. If he informs the banks immediately, his NRE FDs will be converted to resident FDs and banks would start deducting TDS with immediate effect. Can he avoid TDS by banks in FY18-19?
Hi Shirish,
My understanding is if an NRI returns back to India permanently, he should inform the Bank “immediately upon return to India” and get the NRE FDs redesignated as resident FD. (there is no need to take premature withdrawal)
RBI has not defined the term “immediately upon the return of the account holder to India” but it should be taken in its normal sense which can mean a few days or at the most a few weeks after returning to India.
As far as taxability of the interest is concerned the tax exemption would continue only for the years that he was a “resident outside India” as per Foreign Exchange Management Act (Fema). For the FY 18-19, you are treated as NRI as your stay in India is for less than 182 days. Interest on NRE FDs would remain exempt for 18-19 financial year.
Informing bank about your permanent return is not a criteria for your taxability, taxability arises according to your residential status.
What about persons of Indian Origin having OCI card who have accepted foreign citizenship and desire to come and stay in India.
Dear Jagdish,
As an OCI when you return to India, you will automatically be RNOR. And you will not be liable to any taxes in India on your global income.
HI Hemant,
I can rate this a very good and rare article as no one else ever covered this topic. I have been in touch with my RMs from largest private banks of India, who are in regular touch with me for investments. I have queried them many a times about the same subject how our long time earnings from abroad and NRE deposits will be treated after I return to India. But never I received any info about RNOR or RFC. But above article is really self explanatory and will surely serve financial planning of those who return to India.
I am regular reader of your articles since 2010, I suppose.
Thanks Yogesh Ji – you made my day 🙂
Must share this with your friends…
Interesting as well as informative Article, Mr. Hemant.
Mr. Yogesh, you have mentioned a hard fact, RMs communicate NRIs for proposing the investments and when one ask any technical question they even do not know the NRI.
Hi Hemant,
Thank you for the insights. I claim RNOR status but my current foreign employer wants to retain me and continues to deposit salary during the period. I don’t resign but my employer gives the facility to work from India while the salary continues to be paid in foreign account.
In this case, will this income be taxable ? Should I declare this ?
Much appreciate your response.
Regards,
Arun
Hi Arun,
I will suggest you have a word with CA – DTAA.
My understanding is if it’s not taxed in a foreign country – it will be taxed in India.
Hi Hemant,
I came back from USA Oct 2018 and qualify as RNOR for 2019-2020 fin. year. I sold certain assets in foreign country during 2019 and repatriated income into indian NRE account. Since I am not legal resident in foreign country, no tax applies. Since I am RNOR, foreign income is tax exempt. In this case, should I pay tax only on indian income and foreign income remain tax free? Is it right?
I am currently an NRE for past 20 years. Now I am planning to return to India permanently. Can I get RNOR status after my return to India?
Dear Roshan,
Yes – you will get RNOR status.
Hi Hemant,
For some one who has been been in US from 2008 and planning to return June 2018, for year year April 2018 to March 2019 – RNOR, April 2019 to march 2020- RNOR and for April 2020 to March 2021 – Ordinary resident.
But in the above section, it talks about one can be RNOR for 3 year. How is that possible
Hi Rao,
If you see the RNOR flowchart above in the article, you will find after fulfilling basic conditions of resident if anyone unable to fulfill second condition then it will fall in RNOR. So if a NRI lives in india for 3 completed years, then second condition will get fulfilled and he becomes resident.
In your case if you come in june 2018, then your 3yrs will complete in 2021-22 FY. You will remain RNOR till march 2021
Hi Anuj, based on above logic, if we arrived in Feb 2017, can we avail RNOR upto 2019-20 FY? Please let me know.
(question because we came in Feb – like previous FY)
Thanks!
sir it’s about rnor status. bankers are asking the section number in the tax rules where it is mentioned about rnor status and its benefits.they are not ready to accept the fact instead they insist to convert accounts to resident and pay tax from that date even though you have rnor status. please help
Hi Hari
Section 6 of the Incometax Act deals with residential status and conditions of RNOR status fall in the same section.
As per FEMA, if you permanently come to india, you are designated as resident from the first year and banks will redesignate your account.
You can hold NRE and FCNR deposit till maturity but you can avail interest tax exemption on FCNR interest till you have RNOR status.
Why fcnr deposits different from nre fd in rupees. As per rule both are repatriable .fcnr in designated currency nre fd in rupees but backed by a foreign currency.that’s why it’s repatriable. Correct me if I am wrong.so when you consider tax exemption for FCNR deposits under rnor it should be applicable to nre fd also. Need an expert opinion
Hi Abrahm,
As mentioned above in article, interest on FCNR deposit maturity and your status is RNOR. But in such status you can’t renew them. So there is parity in terms of taxation of interest in RNOR status.
In case of NRE FD – you can convert them to RFC if you want.
If NRI rturn to india before completion of 5 years what woudbe status of NRE accounts .
Hi Rakesh,
You can easily check your status with the help of chart given above. If your status is RNOR, you can enjoy tax-free interest on FCRN. Status of NRE account changes once you become resident.
Dear Mr. Hemanth,
Very nice articles on RNOR and RFC. The banks were not aware of RNOR status.
I returned back for good on 1/10/2018 after staying abroad for more than 15 years. I understand that I will be RNOR. I will be converting my NRE & NRO Savings account to Resident accounts this month. I have a few NRE FD’s maturing next month. If I transfer the proceeds to the converted resident account on maturity do I have to file and pay tax on the interest component as per my tax slab. Please advise. I feel the bank will deduct TDS before crediting proceeds.
Other suggestion was to transfer the proceeds to RFC account which will be tax exempted. But then there will be exchange rate convertion loss due to buying and selling in usd since I need the funds in rupees.
Please advise.
Thanks
Madhu
I was living in india till 1st march 2015 and left for employment to dubai on 1st march 2015 and worked for a year. After that i joined in 2016 another company in dubai and worked till june 2018 and left due to ill health and continued living with my son as dependent who works in dubai.. I was in india during fy 2018 19 less than 182 days. Our whole family is living in dubai. What is my residential status for income tax return filing.
Hi Mahendra,
I think your residential status in FY18-19 is NRI as you are not in india in previous year 18-19 for 182 days or more or
365days or more in 4 years immediately preceding the previous year 18-19 and at least 60 days in previous year 18-19
Dear Hemant, it is clear that the FDs may not attract TDS during the RNOR status. However, if this person is employed in India during these 2or3 years as RNOR, will he be liable for taxes for the amount earned via salary from the employer only. Or while filing returns will he have to mention the interest earned on the FDs and pay tax for it. My question is applicable, only for during the RNOR period.
Hi Sanjay,
Income received or accrued in india is taxable even if you have RNOR status. If you are receiving salary for services rendered in india, your salary is taxable You have to mention FD interest while filing return and if TDS is deducted on your FDs, you can claim it in your return.
Hello There,
I am an Australian citizen and currently live in India. Would I need to pay taxes if I am generating no income? Is there a limit to the number of days I can stay in India if I am not drawing in a salary from an entity within India?
Thanks so much!
Sp
Hi SP,
As you are a foreign national and earning no income in india, there is no question of tax in india. Staying in india depends upon your visa permits.
Very educative .I returned aug 2018 , after 18 yrs in Gulf. How do I clame my RNOR status
Hi R.S. Sastry,
You can claim RNOR status in FY 18-19 while filing your income tax return in india
What is the benefit as RNOR a/c and for how many years the benefit is availed if I have returned in Aug 2018 after 18 yrs in Gulf
Hi R.S.
You can avail benefits of RNOR for maximum 3yrs. In FY18-19,19-20, 20-21
I was a NRI for the last 21years. I have some NRE FD s. Recently I mean returned back to india in ladt June. In RNOR status Interest earned on NRE FD s taxable during RNOR status
For a returning NRI , with RNOR status, you have mentioned that interest on NRE FD is free of tax till deposit maturity. Is it true as I had been informed through all other sources that interest earned on NRE a FD in Indian Rupees is taxable from the day I return back to India irrespective of RNOR status
Hi Jaweed,
If these FDs are converted to RFC – interest can be tax-free but rates & structure of the product is totally different.
In case of PIO having regular business in USA starts a back office in India and stays for more than 182 days in India, then upto which period he will be R N O R?
Will interest earned on his funds in NRE/FCNR account will become taxable in India? Since he has also set up business in India, his status immediately becomes resident under FEMA?
Hi R.K.,
As a NRI, you are running a back office in india and earning in india from that backoffice. Your income from such office is taxable in india even if you hav RNOR status. You can avail RNOR status upto 3 yrs. Only interest from FCNR deposit is exempt from tax till you are holding RNOR status.
How does one get/claim RNOR status ie. what online or paper form should i fill to claim this status and where can i find them?
Hi Ashutosh,
This is a residential status for income tax purpose.You can hold this status only while filing your income tax return
I am RNOR. I have FD in INR in NRE account. Is interest in these FD’s taxable?I also earn consultancy income from one client from abroad and being paid in USD in my NRE account. Do I have tax liability on this income?
Hi Manish,
Whatever your status is any income received in India will be taxed in India so file tax.
Dear Hemant,
Thank you for this very useful information. Can you please tell where is the claus/rule that say for RNOR interest on NRE FD is not taxable ? Because some CAs even do not know and say that NRE FD ineterst is taxable for RNOR status.
Appreciate your reply.
Thanking you,
Balkrishna Kapdi
Dear Hemant jee, Brilliant work by you. I returned to India on 4 February 2016 after working overseas for 15 years. I filed IT return for FY 2016-17 and 2017-18 as Resident Indian and claimed exemption under RNOR providions. I worked outside India for about 150 days in total till end of FY 2018-19 since my return to India. Please advise on applicability of RNOR exemption for FY 2018-19 in my case.
Hi Prakash,
Yes, you are RNOR for FY18-19
Where is the rule written that during RNOR status, interest on NRE FD is exempted from tax ? Because even many CA say that only FCNR interest is exmpted and not NRE FD ineterst.
I came in india on 1st March 2019. How to calculate RNOR status
Hi Rohan,
You can find your status with the help of the diagram mentioned above in the article
Dear Sir,
I was NRI from 12-10-1981 to 16-5-2017. How many years I can avail RNOR status?
Regards,
Omkar
Hi. Omkara,
You can avail RNOR status only till FY 2018-19.
Dear Akshay,
I was not aware about this , since one year iam in India. How can I change my status to RNOR. When I asked bank they said they have only resident account. My 23 years saving are in NRE account. Kindly please help me.
Sanil
Good information on RNOR. BUT there is disconnect on redesignation in reference to tax free interest earned till maturity
During RNOR period of the person goes away to abroad for say 4 months then how will you calculate number of days leading to 729?
I have returned to india on 4th april anf my wife on 15th march.. i have nre fd account.. what happens to the interest on them. I have been resoding oitside india for past 13 years
Hi. Jainendra,
You must check.
https://wisenri.com/nre-fd-after-return-to-india/
Good Morning.,
Can you reconfirm that for a person on RNOR status the NRE deposits interest income is not taxable until maturity?
I am on RNOR status for AY 2019-2020 and preparing my IT Returns now. My auditor is now saying NRE Deposit interest is taxable during RNOR status.
But I find logic in your assessment, the Banks too, have not deducted TDS on NRE Interests. In addition for practical purposes, NRE Deposit and FCNR Deposits are the same.
Is there any case study where the IT Department has accepted or rejected our contention that NRE deposit Interest during RNOR is not taxable?
Thanks a lot.
Hi Sundar,
For this purpose, one needs to determine residential status under FEMA. If a person is NRI under FEMA, only then his interest on NRE account will be exempt from income tax.
In all probabilities, an RNOR will also be a “resident” under FEMA. If this is the fact, his interest will be taxable.
Dear Sundar,
How can I change my status to RNOR from NRE as I worked more than twenty years. What is the procedure for that. Kindly please help me.
Sanil
i have been an nri for 20 years till jan 2017.. wil i be rnor this FY.?
Hi. Prakash,
No, you will not be eligible for RNOR for FY 2018-19 because you have stayed in India for 800 days approx > 729 days till March 31st, 2019.
Kindly clarify me.
If a Nri deposit opened on 01 7.17 for 10yrs and he became resident on 01.4.2019 what will be deposit status? Whether it can be continued till ten yrs. If can be continued means what about the ineterst. Is it taxable?
Hi. Mahe,
You must check.
https://wisenri.com/nre-fd-after-return-to-india/#comments
How to convert domestic deposit to nre deposit?
Hi. Mahendran,
You cannot convert domestic/saving deposits into NRE Deposits but you can convert it into NRO deposits.
For this, you need to consult with your banker or you need to intimate them regarding your NRI status.
Hello Mr. Beniwal,
Thanks for sharing such useful information, it really helps. I would like to ask my query. I have been out of India from SEP 2007 to may 2018. I returned in may 2018 with another offer in hand, however by the time visa & other formalities were completed, it was Feb. 2019. So I am currently out of India. I don’t know what would be my status for financial year 2018-19? Also, since I was supposed to go back out of India, I did not inform bank as there was no plan to return. However, now I am planning to return in August 2019 permanently. Please let me know what should I consider while filing return for year 2018-19? Also, in this case when does my RNOR status starts & ends?
Hi. Mahesh,
As you have stayed less than 182 days in FY 2018-19 that means you have to file ITR as Resident Indian.
For RNOR status please refer Example in the above Article.
I am confused about my Residency status for tax purposes. I moved to Australia on 25 Aug 2018 and found a job there. This means I have stayed for less that 182 days in India and can claim India tax return for FY 2018-19. Is my calculation correct ? I have always stayed in India before moving to Australia in Aug 2018. Would I be correct in assuming that the 60 day rule(+365 days in previous 4 years) does not apply in my case ?
Hi. Cyril,
Yes, You are correct.
A person who was nri for more than 10 years happens to be in india for approx 250 days. So his status changes in that fy to rnor .right? Now if he goes out of the country again for job for more than 185 days .will he become nri again? How is tax treated?
Thanks for writing about RNOR. Something new that not many people are aware of.
Thanks Rajesh 🙂
My bank told me that they don’t have RNOR. Only resident account. I spend 20 years abroad. Please help.
I am finally returning India after 33yrs continuous stay in Saudi Arabia in sept 3019…Does my NRE Fixed deposits and its interest in Indian rupees are free from any income tax in india till my status is RNOR..pls clarify in detail
Dear Dr Masood,
You can convert those FDs to RFC or tax will be applied.
I am a seaman, working on foreign ships.My stay in India has always been less than 182 days. However if the previous 4 years is counted, my stay in India is more than 365 days.
Hi Kevin,
What’s your question?
I was out of India for more than 20 years and came back permanently in January 2019.when I need to file my return and does my NRE F D will come in perview of RNOR. Status. When I need to inform the bank for redgine my nro and nre account. Please clarify
Hi Janak,
According to FEMA one becomes resident as soon as he returns but for tax purpose, you were NRI in 2018-19 – you can inform your bankers now.
I could not complete my NRI days, in last financial year. I have been NRI since 2003. Kindly advise, what is RNOR?
Dear Sir,
I have been an NRI since Sept 1982 and returned to India on October 2016. During these years I have come to India for an average duration of 45 days per year. From October 2017 onwards I went abroad and will be working there until October 2019, when I plan to setttle in India Permanently. Kindly advise what will be the status of my existing NRE FDs and NRE SB account after October 2019. Can I claim RNOR status? Can I keep the NRE FDs until the maturity period ? How can I save on taxes after October 2019. Thanks for an urgent reply.
Hi Ajith,
I will suggest you get in touch with a CA.
I AM A SEAFARER HAVING COMPLETED THE OBLIGATION OF SAILING ONBOARD FOREIGN GOING SHIPS FOR MORE THAN 182 DAYS IN THIS FINANCIAL YEAR. WHAT IS MY RESIDENTIAL STATUS . (I COULDN’T COMPLETE MY NRI TIME LAST YEAR AND ENDED UP PAYING INCOME TAX FOR THE LAST FINANCIAL YEAR)
For Ronr if it’s said less than 729 in the last 7 financial year. Can you give an example?
Hy Ms
Say you are in Fy 2019-20. So, Last 7 Fy would be from Fy 2012-13. During this period you have to stay for 730 days.
No matter how many stretch you take to complete this.
Hello – this is regarding RNOR status. I left India in Feb, 2008 and got back in Jan, 2017. I lived in Middle East (ME), Africa and US during this period. I have some deferred benefits with the company both for period in ME and Africa (Pension, Profit Sharing, etc.) as well as in US (401K). I returned back to India in Jan, 2017 with the same company and am leaving the company next month (Aug, 2019). Am I eligible for RNOR status?
Hi Abhishek
You will be RNOR for Fy 2019-20 and from then you will be a resident if you stay in India only,
I worked for 35 years outside Bharat and came back to Bharat on 27.04.2019. How I will get RNOR status and for how long I will be exempted from Income tax. Now all my NRe / NRO accounts became Resident accounts and I do not have any FCNR account
SIR I HAVE GONE TO UAE FOR BUSINESS PURPOSE SHOW TO AVOID TAX IF I SEND INCOME INDIA EVERY FY
what the Residential status of a Student going abroad for studies in august 2017 and another going in Aug 16
Hi, Rajinder
They will be consider as either RNOR or NRI as per their previous staying in India.
I am an NRI for last 29 years working in Indonesia.want to go back to India for good.when should I go in a financial year so that I can avail RNOR status for maximum number of years. Thanks
Hi Lokaish
As per my knowledge you can avail it for maximum 3 yr , you come to India before October in any year and stay here only.
You have written that interest on NRE deposit is not taxable till NROR status if NRE deposit is converted in to RFC deposit in foreign currency. Now please inform after how much time I can convert FC in RFC deposit in rupees to earn regular income by investment in india. Thanks.
Hi Narendra,
As soon as your status turn into ROR, you have to convert RFC into Normal savings account.
Can I convert all my existing NRE rupees fixed deposits money to RFC fixed deposit immediately after final return to India after staying 33yrs in Saudi Arabia and avail tax relief as RNOR
Hi Dr Masoodsa
Yes, you can avail tax relief.
Hi Hemant,
This was a v good article which will be useful for all NRI planning to return to india.
I am an NRI more than 10 years now & thinking of coming back for good, will i lose the NRE FD tax benefits immediately on maturity & what to do with existing NRE account ?
Thanks and regards
Thanks Krishna.
Existing NRE Accounts should be closed & FD should be assigned as a resident – interest will be taxed from the day you will arrive in India.
A PERSON RETURN IN INDIA ON 25.11.18 AFTER STAYING 10 YEARS IN ABROAD. WHAT WILL BE STATUS IN FY 18-19
Hi Barun
That person will be considered as NRI because he is not fulfilling the basic criteria.
NRI for the last 12 years come back to India in June 2016 what is my residential status for FY 2018-19.
Hi RIchaa
I think you would be Resident- Ordinary Resident.
I returned in India on 10 September 2018 after staying abroad for more than 14 years. How long my RNOR status will continue ?
Hi Baman,
For the year 2018-19, You will be considered as an RNOR, and for the next two year your status will be RNOR.
As i am in the merchant navy, For the year 2018 1st april -2019 31st march i was out side india for 158 days only but the requirement is 182 days. Do i have to file tax for the 2018-2019 ?FYI – but from January 2018- 31st Dec 2018 i was outside india for mlre than 182 days.
Hi Rajesh
As you are into merchant navy, some rules will be different for you. So, its better to consult a Tax Advisor for this.
How does returning NRI inform the banks and when he has to inform about the change in status?
Hi Barun,
Consult with your Bank.
Hi Hemantji,
When I return to India after being an NRI for more than 10 years and do not plan to stay for a continuous period in India for coming years, can I claim RNOR status for more than 3 years? As long as I satisfy the criteria for RNOR in Section6? Is there any section restricting the RNOR status availment for more than 3 years even when the I am complying with the RNOR criteria?
Appreciate your inputs on this question.
Thanks
Mugdha
Hi Mugdha,
Please consult a CA.
I want to have clarity on rnor status & tax on interest eatned on NRI FD AFTER becoming resident.
Hi Mahesh,
RNOR status doesn’t provide any benefit in the case of NRE FD – interest will be taxed.
I Am an NRIs I want to buy a plot in my country. Do we exempt tax on gst?
Hi Harikrishna,
Please consult a CA
I am working in ksa from 6.6.1988 to 4/06/2019 and than 1/09/2019 to 31/10/2019 is my last date for retirement Before going to india i will going to send my end of service benifit to my NRE account. considering this financial year based on above-mentioned dates I was going to stay in india 610days only in the period of 7 years and up to 2018 – 2019 i am NRI.the money going to send India principle is taxable ?.
Hi, Syed
As per my knowledge, After you become a RNOR you have to transfer your money into RFC account and as you have earned this money being an NRI, It will not be taxed in India.
If i take RNOR status for 2019-2020 and next 1 year i.e 2020-2020 i am again out of india for 185 days then am i counted as NRI
Hi Priya
Your status will be decide as per different conditions. So, refer those for best answer.
Working on ships overseas company with irregular nre status,, salary in fcnr and nre account with bank in india. what is tax liability and for how many years
Hi David.
Consult with your CA.
I went to Bahrain on 29 September 20212. Iplan to return t India for good 15 July 2020. Now tell me am I eligible for RNOR status?
Hi Anthony
You will be considered as RNOR as per my knowledge
tax liability in nre fd after status from nre to sb
Hi Aniket
It is exempt from Tax
Hi Aniket,
When the status is changed to SB, then it is taxable.
hi i am an oci holder with british passport. Have been living abroad for 17 years and we are planning to move to India permanently. Do we need to pay tax on selling property abroad?
as an RNOR do i pay tax on my NRE fd’s.
Hi Praveen,
You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to the resident account immediately upon returning to India.
Hello Hemant,
Thanks a lot for the explanation.
I have a question, during the financial year for which i claim RNOR status , can i move funds from abroad (Tax refund and Final settlement of salary) to a resident account without those counting as income in India or does it necessarily have to be moved to a RFC account, please let me know
Regards Ajith
Hi Ajith,
As per my wisdom , Its better to transfer into a RFC account and during your RNOR status, your earning outside India will not be taxed in India. Rest you can consult a CA for better Tax suggestions.
I was in Gulf from Sep 2001 to April 2017. How many years I can be considered as NRI assessed. 2 or 3 years
Hy NB,
As long as you stay for more than 182 days in India in a Financial year, you will be considered as a resident but further classification will be depend on how long will you stay here
I was an NRI for more than 20 years.I came back to India finally in Feb. 2019. What will be my status regarding money in NRE accounts?
Hi Hafiz
As you become a RNOR status person, you have to transfer your money into RFC account and then into savings account when you become a Resident.
Does RNOR have to pay tax on interest earned on rupee NRE deposits?
Hi Ronald,
Yes, it is taxable.
I want to know my NRI status. I joined a ship on 25th may 2019 and will land in India on 26th Nov 2019
Hi. Roy
As per my knowledge you will be consider as RNOR
Indeed Nice article.
I have following 4 questions as planning to settle back in India after stayed in GCC county for 11 years.
Question-1. Which of the Government body has authority to ensure, confirm and give the status as RNOR? is it FEMA or Incometax department or RBI or Bank or CA or else?
Question-2. Till RNOR status one can continue NRE account or not? and if bank say not then what to do?
Question-3 What happens to the MF investment made under NRE kyc, during RNOR stage and after resident stage. When and how to re-designate the kyc under RNOR and resident stage?
Question-4 If the investment is made in MF in international market during NRE stage and will continue to invest for more 5 years even after returning to India. After achieving the resident state in India if those MF redeemed and brought in India, do whole redeemed amount is liable for tax or only the capital gain? since the investment was made during NRE stage only.
Looking forward for your response.
Hi Dilip,
Ans 1 : Its Income Tax Department as the guidelines are set by them.
Ans 2 : As an RNOR, You can continue with RFC account as you have to transfer your money into RFC account but after you become ROR, you have to convert into savings account.
Hi, Dilip
Ans 3: As per my knowledge, as you turn into a ROR, You have to re-designate your KYC as a Resident.
Ans 4: For taxation purpose its better to consult with a CA and what will be the laws after 5 yrs , it will depend on that.
I have become RNOR this year but next your I’m planning to be outside India for more than 182 days. Can I repatriate amount from my NRE & NRO accounts or RFC next year.
Hi Rakesh,
As per my knowledge you can repatriate.
Sir my querry is regarding conditions to satisfy RNOR status
section 6 states that
(a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year,
in the above statement it is not clear to me what it means by “ten previous years preceding that year”
so if i am NRI for the year 2019 to 2020 and return to India permanently on 1 january 2020 ,
1 it is clear to me that i am NRI for the financial year 2019-2020
2) i am RNOR for the financial year 2020-2021
3) i am not clear about about my RNOR status in 2021- 2022
3 a ) if i understand preceeding years means 2013 to 2022 then i am Resident for 2 out 10 years( 2021 and 2022) , so i become ordinary resident
3 b ) if i understand preceding years means 2012 to 2021 then i was NRI for 9 out 10 years , so i will retain RNOR status
So please let me know what it means by ten previous years preceding that year.”
thanks
sathyamurthi
Hi. Sathyamurthi
10 previous preceding year means immediate 10yr from your current FY.
regarding RNOR condition. it says that one is RNOR if he is NRI IN 9 out 10 previous years preceding that year, my question is what it means by preceding that year, which 10 years I have to consider?
Hi Sathya
Last 10 yrs from your current year. Suppose right now we are in 2020-2021, so 10 yrs before this period.
I am a US citizen, living in India for more than 182 days for FY. The only reason for me to stay in India is to take care of my Dad. I do not have any income sources in India, would I need to declare my US income and file Indian income tax?
Hi Gujji
The taxation will depend on your residence status.
RFC currency deposits attract INR valuation gains taxation?
Hi Dinesh
As per my knowledge it is Taxable.
Dear Sir/Madam,
My duration of stay abroad was from 25 July 2011 till 06 December 2019 which comes to 8 years and 130 days or a total of 3050 days.The number of days I stayed in India during this period was 311 days. I wanted to know regarding my RNOR status.
Hi. Parmindar
Your RNOR status will decide as per your stay in India in FY 2019-2020. If you satisfy either one of the condition i.e. being in India for more than days 181 days or 60 days with 365 days in last 4 year, then you can be considered as an RNOR. This status comes with some other condition as well.
Hi Hemant,
My status is rnor for fy2019-20. I will become resident for fy2020-21. I have long term Nre fd. As per my CA, I should start paying income tax and file return in fy2021. Is this correct?
Also I have one nre pis trading account managed by a broker. This is one year old investment and in fy2018-19 the loss is 3Lac. Is it mandatory for me to file return for it? If yes, under which provision?
Hi Kumar,
As you become a resident, you are obliged to file a return. As far as your loss is concerned please refer to your CA for better advise.
Can a retired OCI living in India for more than six months be liable for taxation if his only source of income is FDs in Indian Banks in India?
Hi Himadri,
Any Income earned in India is taxed in India
I stayed abroad for 32 years and came back in Oct 2016. once again I went in Jan 2019 and came back in Nov. What will be my present status as an NRI. I have deposited and want to invest as a safe deposit.
Hi Konanur,
You will be considered as RNOR because you stayed in India between Oct 2016 to Jan 2019, which helped you to claim RNOR status.
How to check my resident status ?
Hi Hajat,
It will depends upon the number of days or years you lived in India, So refer google for exact days and analysis according to that or you can tell your duration over here for more clear answer.
hello. i am OCI holder and settled in india since 8 months. i am now dealing with banks etc and i have RNOR status but i am not sure what to do about my bank accounts. can i keep my NRE / NRO savings accounts? or do i need to convert them to resident accounts?
Hi Shyam
As per my knowledge, you can keep these accounts as you are an OCI holder.
Sir, please advise:
My son, a US citizen, returned to India in June 2017. He has business in US that he handles online from India and also by going there frequently. Till 31 March 2020 he would have stayed in India for less than 729 days. Can he claim to be a RNOR for the F Y 19-20 and claim his US business income as tax free? He has no India income. Please advise. Thanks.
Hi Mehta,
As per my knowledge, he can claim RNOR status and his income will not be taxed in India.
I moved abroad to uae on 03/09/2012 and i am returning to india on 15/01/2020. I have few questions
1.) i have money in my Nre FD maturing in next 2 years. What happens to my FDs after i return back to India?
2.) The money in my Nre account is earned from abroad and i do not wish to pay tax until i find a suitable way to invest the money. What are my options?
3.) I have mutual funds SIP registered with NRE account, what happens to them
Dear Kunwar,
Let me try to answer all your points & this may also help other readers:
1. NRE FD – you can continue your NRE FD but interest will be taxable from the day you will arrive in India – so in your case 15-1-2020
2. Money in NRE Account – if you don’t want to pay tax either you can invest in FCNR before coming to India or transfer that to the RFC account.
3. Mutual Fund SIP – you can change the status in KYC, change bank details with AMCs & continue to hold your investments.
Dear Mr. Hemant,
My query related to the second point responded to Kunwar:
Can the NRE FDs be converted to FCNR or RFC after returning to India?
Thanks,
Ponnambalam
Hi sir, thanks for your article, my question is same as Dilip. Capital gains tax on foreign stock investments after becoming resident Indian. Capital gains meter will start post becoming resident I would suppose ?
would that be correct ?
And how does double taxation treaty help here ?
Hi MS
You have to pay tax on the capital gains which you earned from foreign investments, as far as double taxation is considered it will differ from country to country as different agreements are there between them.
As per the definition of resident status if any person staying in India 365 in the preceding 4 years. I am Canadian passport holder and OCI will this apply to me as I have not stayed more than 181 days in India but have stayed more than 365 days in the last 4 years .how my tax will impact
Hi Mahesh
Yes it will be applicable to you and your tax will be based on your residential status.
thanks. how to claim tax deducted from NRE FD INR interest after becoming RNOR status.
Dear Chandran,
RNOR will not make any difference in the case of NRE FD – interest will be taxable. So depending on your taxable interest in India actual amount of tax will be decided.
I am an Australian Citizen of Indian Origin and OCI holder. I have been an RNOR between late 2012 and early 2015. Then returned back to Australia. I am planning to be in India in late 2025 for 2-3 years. Can I avail RNOR again from 2025.
Hi Lakshmi
Yes, you can avail.
Thanks.
Hello Hemant, thanks for your webpage. For tax planning purposes, what date in the year should an NRI return for getting maximum period under RNOR status?
Hi Ajay
You can avail your RNOR status only for 3yrs. It will all depend when you leave and come in India.
Dear Singh,
With the recent changes in the income tax law, I understand that if you are a NRI for 10 years, then upon arrival in India, you can hold the RNOR status for 4 years.
Regards,
Ajay
Dear Sir, I have returned to India on 11 Oct 2019. Till which year I can claim RNOR status. Do I need to convert the NRE deposit to FCNR?
Hi Sumit,
You can have RNOR status till 2022-2023. You can keep your NRE deposit till you are RNOR.
From 12-sept-2012 to 10-June-2019, I was staying out of India. Can I get RNOR status?
Hi Mishra,
Yes, you can get RNOR status.
I have returned Jan 2020 to India after worked for about 18 years in Malaysia. How many years I am eligible for RNOR status?
Hi Ponnambalam
You will be eligible upto 3yrs, if you are moving India permanently
I work on a rotational job (i.e. I work for 5 weeks and get days-off for 5 weeks) in Saudi Arabia as an oil field professional. What category do I come under like RI, NRI or RNOR? And will be my income earned in Saudi Arabia will be taxable in India?
In the recent Budget announced on 1st Feb 2020, the definition of RNOR has been changed. Can you help update?
Hi Parikshit,
As per the budget, the new changes that have been proposed is that the condition of 730 days in last 7 yrs have been removed but the other condition of being in India for 2 yrs in last 10 yrs has been updated to 4yrs in last 10yrs.
I have stayed in the US from October 2nd, 2013 to December 14, 2018. During these 5 years, I was in India for 55 days. Please let me know if I qualify for RNOR status for this financial year 2019-2020 tax filing. My NRE FD’s matures last month and I have transferred 80% of the amount to my wife’s resident account and still have 20% in my NRE account. Do I have to pay taxes on those amounts If I’m gaining RNOR status? Or it can be avoided by opening the RFC account at this stage? Please help!
Hi Ramesh
As per FEMA, you need to update your bank regarding your change in status of resident, if not not yet you need to do that asap and you will not be qualify for RNOR as you are fulfilling all the conditions of an ROR.
In this case all your income will be taxed.
Pl advise whether I can save on Indian taxation if I convert equity mutual fund from dividend payout option to dividend reinvestment option.
Yes, that can be a better option if you have some income in India. Bw going forward I don’t think Mutual Funds will be interested in paying dividends.
Will my income be taxable in India if I am a resident but not an ordinary resident and getting salary in nre account maintained in India. I am a crew member of a foreign ship.
Hi Sharique
As per my opinion it is tax free
I am planning to return to India from Abu Dhabi sometime in 2nd half of this year. What will happen to my Income Tax status once I reach India (especially related to my Fixed Deposit as an NRE account in Banks?
Hi Rakesh
It will all depend upon your residential status at the time.
I came to India in 2016 December. I was out of India for almost 15 years with very short visits. Am I RNOR or ROR for F.Y. 2019-20?
Hi Ashok
You will not be considered as RNOR
I have to work in UAE form 30.12.2012 and have returned to India on 05.03.2019 and settled in India to carry out my UAE company branch in India. My question can I be treated as RNOR for the 1st year, if yes do I need to pay taxes as my income comes from my UAE company.
Hi Ashok
Yes you will be considered as RNOR and the income which you received from your UAE company will be taxable.
Hi Mithun,
I have seen somewhere stating RNOR will be treated as equal to NRI for 1 or 3 years. Also i saw it stating the income earned in INDIA is only taxable during this period. Kindly advise
Hello Sir, My question is related to RNOR status. I came back to India in Aug 2019 after spending 10 years abroad. Also, I have stayed for less than 730days in the last 7 years in India.1. My understanding is that I can hold RNOR status for 3 years. 2. I am still holding my savings in the NRE account but don’t have any FD or any other investment abroad. Can I still convert my savings into NFCR or FCR account as I am already back in India? If not then please advise me what is the best possible way to save my savings from tax. 3. If I convert my NRE account into a normal account then how will I prove that my income is not taxable as I have RNOR status. 4. Do I need to pay tax on the interest earned in my NRE account as I have already canceled my residence status and I have moved to India in Sept 2019?
Hi Ramesh
1) Yes, you can hold it for 3 yrs.
2) It is advisable to convert it in residential a/c if you are not planning to move out again.
3) I think you will get a certificate or document from your bank which will help you to prove your income else you can take help of a tax advisor.
4) No, Interest earned on NRE is tax free
question on RNOR status. for the calculation of the 730 days condition, is the current financial year included? or is this 7 years preceding the current financial year?
Hi Shobha
It is 7yrs preceding the current financial year.
I have been out of India for employment for more than 35 years. Still keeping NRI status. In case if I return and settle in India from July 2020 onwards, What I have to do with NRE Account FCNR(B) etc.
Hi Saleem,
You have to convert them into RFC account.
I change my status from NRE to Resident on July 19, after spending 12 years in UAE. What happens to NRE FDs will the interest be taxable during FY 2019-20?
As per my knowledge, It will be exempt from tax until you are RNOR i.e. Resident but Non – Ordinary Resident.
I want to know regarding the interest on FD after NRI status.
Hi Rao
Interest earned on a NRE FD are tax free whereas on a NRO FD, it will be taxable.
Can RNOR open a bank account and make FD?
Hi Ankur
Yes, you can open RFC account and create FD as RNOR.
Please inform, for RNOR, NRE FD and FCNR FD interest are tax-free or become taxable in India?
Hi Prakash
Interest earned on FCNR FD is Tax-free whereas for NRE FD, it is taxable for RNOR
For how long my NRE fixed deposit is free from tax once I permanently reside in India?
Hi Dany
As per my research, NRE FD is tax free till the time you are RNOR.
Sir, thank you ever so much for highlighting critical aspects of the NRE to NROR transition.
Just one query: My bankers are saying that once I get the NROR status,they will continue to charge the Tax amount as TDS, on the interest earned on my FCNR deposits.
It is upto me to submit my annual IT filing and get the additional tax paid as a refund.
Is it correct? What I am given to understand is that once you are eligible for a RNOR status and you have been assigned the same, then NO TDS is done on the FCNR interest accrued during the financial year
Thank you so much for your advise.
Hi Dinesh
As per my knowledge, FCNR is Tax-free for RNOR so there will be no TDS deduct on that.
sir. I am working in saudi for the past 26 years continously . i will resign job and come to india in august 2020 . howlong my nri atstus will continue and should i pay income tax for the Fy 2020-2020 .
Hi Ramesh
Yes, you have to file the Income Tax return for the income earned in India & you taxability will depend on how much you have earned in FY 2020. The NRI status will continue for will depend on when you return back and what was the status of your previous visits to India.
Generally a person can enjoy RNOR status for 2 to 3 years.
Can I hold NRE FD in the status of RNOR?
Hi Janak
You cannot hold NRE FD, you need to convert it into Residential FD. It doesn’t mean that you need to premature close your NRE FD and start a new only. Just contact with your bank and tell them to convert it in Residential FD.
Is the amount earned abroad will come under income tax in India?
Hi Kamal
It will depend upon your residential status. If you are an Resident Indian, then it will be taxable in India.
Thank you.The word RNOR is first time for me,
Thanks for appreciating 🙂
Based on the above on RNOR, which month or part of the year is best for someone to return to India for good if they need to maintain NRI/RNOR status to the maximum. Lets base this if someone is planning to return in 2020 remaining part or early 2021
Hi GP,
One should come after September – assuming you are taking care of 180 days criteria. (But still, I will suggest you have a call with CA because now there’s an additional criterion of 15 lakh income)
I am working in Kuwait for more than 10 years. Since the NRE FD is of low interest can I do FD in some co-operative banks?
Hi Prethiumnan,
Yes, you can open FD with Co-operative. These FDs involve very high credit risk.
I am US Citizen, with OCI card. I am planning to move to India for a long time and I may work remotely from India for a US Company. Do I have to pay taxes in India?
Hi Rajesh,
As per my knowledge, you need to pay taxes as the income will be accrued in India
I have just returned to India and I am in RNOR status. I have some IRA accounts in the US which I want to transfer to India. However, I will not be able to complete transferring all IRA balances in these 2 years. What happens after my RNOR status is over? Are my overseas balances in IRA accounts taxable?
Hi Sundar,
As per my knowledge, when your status will become resident then any income from around the world will be taxed.
I am NRI since April 2018, am I an RNOR?
Hi Pramod,
RNOR status will also depend on your residential status or stay in India before April 2018.
As per my understanding, you will consider as RNOR
Is TDS applicable for an RNOR while he receiving INR FD Interest..?
Hi Josmy,
Yes, TDS will be applicable if it crosses the prescribed limit.
HiHemant,
Many thanks for sharing detailed information, however I heard there has been some recent changes in the laws post march 2020.
My question :I am NRI since 2020 Jan and both criteria’s are fulfilled for NROR (plan to return before end of sep2020)
NOW MY QUESTION :after reading your article its seems I don’t have to pay tax for my income (april2020-sep2020) till the time I hold NROR status (I believe it could be till 2022).Kindly confirm,
Hi Mohit
As per my knowledge and the Latest Amendments, you will be ROR, rest will depend upon other factors too.
Sorry i meant RNOR and not NROR,kindly read above comments accordingly
First Time I went In Dubai on 19-03-2018 and return in India on 20-03-2020. In my opinion my residential status for F. Y. 2018-2019 and 2019-2020 is NRI. I worked in Dubai on salary Basis in Dubai Sheikh owner Company. Received 2500/- Dirham P.M.. I transfered Rs. 374000/ in 2018-19 and 425600 in 2019-20. I want to show this trf. money as exempted income . I want to know where I have to show in the ITR. I have business income in India Rs. 190000/- in 2018-19 & 2019-20.
HI Jagmer
Kindly consult your Tax adviser for the same.
Explain the additional condition of 2 years out of 10 immediate previous years?
Hi Kavya
This means that you should be a resident for atleast 2 years in the last 10yrs preceding the current Financial Year.
For example – We are in the FY 2020-21 then preceding 10 yrs would be from FY 2010 to 2019
Hello Mr Hemant, Thanks for the clarity. I have a question relating to a specific situation. I am Indian citizen and living in UAE continuously from 2004 and now returning to India in October 2020. According to new rules ( 120 days), I understand that I will be a resident for FY 2020-21 while still be a RNOR. I want to know if for FY 2020-21. I have to pay tax on the salary earned in UAE?
How can I avoid paying tax on the income earned in UAE . Do I need to postpone coming back?
Thanks
Vipa
Hi Vipa
If your Indian and Abroad Income exceeds the limit of 15 lakh, then it would be advisable to postpone this a little forward.
I am an NRI from 1989 and planning to settle in India permanently from 2022 end onwards . Can I be given an RNOR status? For how many years? Each year the max I wld have spent is not more than 3 weeks in a year. For how many yrs I can get tax exemption ?
Hi Jaya
As per my knowledge, You will be RNOR for 2 years.
If one is having 178 days in India and 178 days in each year before that particular year, will he be an NRI? he is on employment in Dubai.
Hi Husain
As per the provided information, I think the person will be Resident Indian.
I am an NRI moving back to India in Oct 2020. I lived abroad for 4 years. Will my salary earned from my job in Dubai in Apr-Sep 2020 (before I move back to India) be taxable in India?
Hi Nishant
It will depend upon your Tax Residential status as per the IT law.
If your status is ROR then it will be taxable else not.
How are seafarers going to be taxed I need India from this year onwards?
Hi Harry
As per my understanding, your question is that ‘You will be in India from this year and wanted to know the Tax effects on this?’
If my understanding is right than it will be depend upon your previous stays in India.
Kindly contact your Tax advisor for this.
Should RNOR show the details of the bank accounts of the foreign country in ITR filing in India
Hey Prasad,
As per my knowledge no need to show the foreign account details
I have been a seafarer for last 15 years and maintained my NRI status. This year will not be able to maintain my NRI status. But I am working from India doing audits of ships remotely all over the world. I am paid in USD from my company situated in London. Will I have to pay tax on my earning in financial year 20-21. Thanks for your reply.
Hey Moolayil,
If you are not paying tax in London, you have to pay tax in India.