Now Reading: RNOR status can shield returning NRIs from tax on foreign income
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RNOR status can shield returning NRIs from tax on foreign income
RNOR status can shield returning NRIs from tax on foreign income
Returning NRIs may qualify for Resident but Not Ordinarily Resident status, a temporary category that can keep certain foreign income outside India’s tax net. The status applies if they were non-residents in…
The Story in Brief
Returning NRIs may qualify for Resident but Not Ordinarily Resident status, a temporary category that can keep certain foreign income outside India’s tax net. The status applies if they were non-residents in at least nine of the previous 10 financial years, or spent 729 days or fewer in India over the preceding seven years.
During the RNOR period, Indian salary, rent and bank interest remain taxable. Foreign dividends, overseas rent, capital gains and offshore interest are generally not taxed in India, unless linked to a business controlled from India. NRE and FCNR interest is generally tax-free, while NRO interest is taxable at 30% plus surcharge and cess. Once ROR status begins, Schedule FA disclosures become mandatory, with penalties of up to Rs 10 lakh a year for omissions.
The Indian Opinion
Claims that RNOR is a blanket tax holiday are misleading, just as warnings of immediate tax on every overseas asset ignore the transitional rules. The real risks are practical: miscounting travel days, routing foreign income into India and missing foreign-asset disclosures after ROR status begins. Returning NRIs should verify their status each year with records, not assumptions. The decisive check is whether the nine-out-of-10-year or 729-day test still holds.
Sources (2): livemint.com, livemint.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
