RNOR status (Resident but Not Ordinarily Resident) is a transitional tax status for Indians returning from abroad. You are RNOR in a year when you qualify as a resident but were either a non-resident in 9 of the previous 10 financial years, or spent 729 days or fewer in India in the previous 7. While you are RNOR, India taxes your Indian income but generally not foreign income that you earn and receive abroad. For most returning NRIs the window lasts two, sometimes three, years, and your return date largely decides which.
This guide explains the residency tests as they apply in tax year 2026-27 (FY 2026-27) under the Income-tax Act, 2025, what is and isn't taxed while you are RNOR, and how to plan your move around the window. A worked example shows how moving in June, September or December changes the result.
Step 1: Are you resident at all? The day-count tests
Residential status is decided separately for each tax year (April to March). Under section 6 of the Income-tax Act, 2025 (which replaced the 1961 Act from 1 April 2026 with the same tests), an individual is resident in a year if either of these is true:
- You were in India for 182 days or more during the year, or
- You were in India for 60 days or more during the year and 365 days or more in the four preceding years.
The 60-day test is relaxed for some people:
- Indian citizens leaving India for employment abroad in the year: 60 days becomes 182 days.
- Indian citizens or persons of Indian origin who live abroad and visit India (this relief is for visits only; if you are returning for good, the 60-day test applies): 60 days becomes 182 days. If your Indian income (excluding foreign-source income) exceeds ₹15 lakh, it becomes 120 days. A person who is resident only because of this 120-day rule is automatically RNOR.
- Deemed resident (section 6(7) of the Income-tax Act, 2025; formerly section 6(1A)): an Indian citizen whose Indian income exceeds ₹15 lakh and who is not liable to tax in any other country because of residence or domicile is deemed resident, and is treated as RNOR. This mainly catches people living in no-tax countries without tax residency there.
If you fail both tests, you are a non-resident (NRI) for the year. The fastest way to check a specific year is our residential status calculator, which applies these tests and the RNOR conditions below.
Step 2: RNOR or ROR? The two conditions
A resident individual is RNOR for the year if either of these holds:
- You were a non-resident in 9 out of the 10 financial years before this one, or
- You were in India for 729 days or fewer in total during the 7 financial years before this one.
If both fail, you are Resident and Ordinarily Resident (ROR) and India taxes your worldwide income. You also qualify as RNOR through the 120-day rule or the deemed-resident rule described above.
Why the window is usually two to three years. If you have been abroad for over a decade, the "9 of 10" test covers your first two resident years. After that it fails, and RNOR continues only if your days in India over the previous seven years (visits plus your first resident years) total 729 or less. A partial first year can leave room for a third RNOR year, which is why your arrival date matters.
What is taxed while you are RNOR
| Income | NRI | RNOR | ROR |
|---|---|---|---|
| Indian salary, rent, interest, capital gains on Indian assets | Taxable | Taxable | Taxable |
| Foreign income received in India (first receipt into an Indian account) | Taxable | Taxable | Taxable |
| Foreign income from a business controlled from, or a profession set up in, India | Not taxable | Taxable | Taxable |
| Foreign salary for work done abroad, received abroad | Not taxable | Not taxable | Taxable |
| Foreign rent, dividends, interest, capital gains earned and received abroad | Not taxable | Not taxable | Taxable |
| 401(k)/IRA distributions received abroad | Not taxable in India | Generally not taxable in India | Taxable, with treaty/Sec 89A relief |
| Interest on FCNR(B) and RFC deposits | Exempt | Generally exempt | Taxable |
| Schedule FA (foreign assets) disclosure in ITR | Not required | Not required | Required |
Two points often get missed. First, "received in India" means the first receipt. Salary paid into your US account and later transferred to India is not taxed again. Salary paid directly into an Indian account is. Second, NRE interest is exempt only while you are a "person resident outside India" under FEMA. Once you return for good you become a FEMA resident, the NRE account must be redesignated, and interest from then on is generally taxable, even while you are RNOR for income tax. FCNR(B) deposits can run to maturity, and FCNR and RFC interest is generally exempt while you are RNOR. For the account mechanics, see our NRE vs NRO guide.
Worked example: how your return date changes the RNOR window
Priya has lived in the US since 2012 and has been an NRI every year since FY 2012-13. She visits India for about 25 days a year. She plans to move back for good in FY 2026-27 and has no Indian visits earlier that year. Here are three possible arrival dates:
| Financial year | Arrive 1 June 2026 | Arrive 1 September 2026 | Arrive 1 December 2026 |
|---|---|---|---|
| FY 2026-27 | 304 days: RNOR | 212 days: RNOR | 121 days, fails 182 and 60+365: NRI |
| FY 2027-28 | RNOR (NRI in 9 of prior 10) | RNOR (9 of 10) | RNOR (10 of 10) |
| FY 2028-29 | ROR: prior 7 years = 125 + 304 + 365 = 794 days | RNOR: prior 7 years = 125 + 212 + 365 = 702 days | RNOR (9 of 10) |
| FY 2029-30 | ROR | ROR: 100 + 212 + 365 + 365 = 1,042 days | ROR: 100 + 121 + 365 + 365 = 951 days |
| Years with foreign income outside Indian tax | 2 | 3 | 3 (1 NRI + 2 RNOR) |
Moving in September instead of June gives Priya a third RNOR year. Suppose she holds US$300,000 in a US brokerage account with US$120,000 of unrealised gains. Rebalancing that portfolio during an RNOR year avoids Indian tax on the gain. If she did it as an ROR instead, India would tax the gain at up to 12.5% (long-term) with a foreign tax credit only for any US tax paid, so the extra year is worth real money. As a US citizen or green card holder, she would still owe US tax on the gain either way (see below).
The numbers are sensitive. Every visit day counts, and the "arrival day" is generally counted as a day in India. If you visited for 60+ days in recent years, your prior-four-year total may reach 365, which changes the December result. Model your own dates in the return-to-India planner before booking tickets.
Planning moves during the RNOR window
- Time the return date. As the example shows, a later arrival within the financial year can extend your RNOR window. Balance this against school terms, job start dates and visa or green card timing.
- Realise foreign gains while RNOR. Selling foreign shares, ETFs or funds whose gains are earned and received abroad generally keeps them outside Indian tax. Do this before you turn ROR. If you hold Indian mutual funds as a US person, note that they are Indian assets and taxable in India whatever your status. See our PFIC guide for the US side.
- Park foreign currency in an RFC account. A Resident Foreign Currency account lets a returning Indian hold foreign currency in India without converting to rupees, and the money stays freely usable abroad. Interest is generally tax-free while you are RNOR. You can move NRE/FCNR balances into it on return.
- Plan 401(k)/IRA moves around the window. Withdrawals or Roth conversions while RNOR are generally outside Indian tax but fully within US tax, and early withdrawals may carry a 10% US penalty. After you turn ROR, India can tax distributions. Section 89A and the India–US treaty (see our DTAA guide) help align timing. Many returnees leave these accounts alone. Get a cross-border CPA/CA view before acting.
- Handle RSUs and deferred compensation carefully. Equity that vests after you move may be partly taxable in India based on workdays. See our RSU taxation guide.
- Get ready for ROR. Build a foreign-asset register (accounts, peak balances, cost bases) during your RNOR years. Schedule FA becomes mandatory in your first ROR year, and missing it can trigger penalties under the Black Money Act.
The US side: RNOR doesn't change US tax
RNOR is purely an Indian concept. If you are a US citizen or still hold a green card, the US taxes your worldwide income wherever you live. You keep filing Form 1040, FBAR and (above thresholds) Form 8938, and you claim foreign tax credits or the foreign earned income exclusion on Indian salary. RNOR only reduces the Indian tax on foreign income. Giving up a green card needs its own planning (Form I-407, and possible exit-tax rules if you held it in 8 of the last 15 years). If you are neither a citizen nor a green card holder, US tax generally stops at the end of your US residency, apart from US-source income such as US-sourced RSU vests.
Common mistakes returning NRIs make
- Getting the RNOR test backwards. You need to meet either condition (9 of 10 years non-resident or 729 days or fewer in 7 years), not both.
- Treating NRE deposits as tax-free after return. The NRE exemption depends on FEMA non-resident status, which ends when you return for good. Redesignate NRE accounts and move funds to RFC or resident accounts as your bank requires.
- Having foreign income paid straight into India. A final US paycheque, bonus or severance credited to an Indian account is taxable even while you are RNOR.
- Working remotely for a foreign employer from India. Salary for work done while physically in India is Indian-source income, taxable regardless of where it's paid.
- Ignoring visit days. Long visits in the previous seven years can use up your 729-day allowance and shorten the window.
- Missing Schedule FA in the first ROR year, or assuming RNOR relief continues without checking the day count each year.
- Filing the wrong ITR form or status. File ITR-2 (or ITR-3 if you have business income) and select RNOR. The utility asks for day counts and prior-year status, so keep passport records. Our NRI ITR filing guide walks through it.
Checklist for your return year
- List your days in India for each of the last 10 financial years from passport stamps or travel history.
- Test each future year (NRI, RNOR or ROR) using the RNOR status calculator before fixing your return date.
- Decide which foreign gains to realise, and when, inside the RNOR window.
- Open an RFC account and plan the conversion of NRE/FCNR balances.
- Stop foreign income from landing directly in Indian accounts.
- Keep US compliance (1040, FBAR, 8938) running if you are a US person.
- Prepare Schedule FA data before your first ROR year.
- Work through the full moving-back money checklist, including what to do with your 401(k) and IRA.
New law, same idea: the Income-tax Act, 2025 took effect on 1 April 2026. It replaces "previous year" with "tax year" and keeps the residence tests in section 6: section 6(2) for the 182-day and 60/365-day tests, section 6(7) for deemed residency (formerly 6(1A)), and section 6(13) for RNOR (formerly 6(6)). The tests described here carry over unchanged in substance; confirm the ITR fields for your filing year.
Bottom line
RNOR status is a two-to-three-year period in which foreign income you earn and keep abroad stays outside Indian tax. You get the most from it by choosing your return date deliberately, cleaning up foreign portfolios before you become ROR, and not letting foreign income land in Indian accounts. Rules like these interact with FEMA, the US tax system and treaties, so confirm your plan with a CA and, if you're a US person, a CPA. To map the whole move, including retirement corpus, accounts and taxes on both sides, start with our NRI planning hub, and see how much you need to retire in India.
Want your RNOR window and return-year moves planned end to end? Get your complete NRI plan.