The RNOR Window

After years abroad, India's tax net does not close around you on the day you land. It closes in steps, and for a long-time NRI there are usually two or three Indian tax years in between when you are a resident but not an ordinary one. This chapter goes into how that status is tested, where the edges are, what the window protects and what it never touches, and which decisions people line up around it. The Library's quick answer "What is RNOR?" covers the basics in a page; this chapter is for the household deciding which year to land in and what to do before the window ends.

The three statuses and the two tests

India's Income-tax Act, 2025 applies to tax years from 1 April 2026, and a tax year runs from April to March. Residence is section 6. An individual is resident in a tax year if they are in India for 182 days or more in it, or for 60 days or more in it and 365 days or more in the four tax years before it (section 6(2)). Someone who is resident is then sorted into one of two groups. Section 6(13) makes a resident individual "not ordinarily resident" if either of these holds:

1. they were a non-resident in nine out of the ten tax years before it; or
2. they were in India for 729 days or fewer in total in the seven tax years before it.

Everyone else who is resident is resident and ordinarily resident, or ROR. A person who is not resident is a non-resident, or NR. These are the numbers the Act uses. Under the 1961 Act RNOR was section 6(6), the number most articles still cite. The Income Tax Department's help page for non-residents says the criteria did not change (its FAQ 5) and that the nine-in-ten and 729-day tests keep looking back to years governed by the 1961 Act (its FAQ 11). Section 536(3) of the 2025 Act says the same in the Act's own words: a reference to a tax year up to 2025-26 means the corresponding previous year under the repealed Act. The RNOR timeline calculator applies them year by year to your dates.

For someone abroad ten years or more, the usual result is that the first two tax years back are RNOR, because nine of the ten years before each are still non-resident years. The third year fails the first test, since only eight of the ten years before it were non-resident. Whether it passes the second test depends on the days. If the days in India across the seven tax years before the third year, which include your landing year, the full year after it and every earlier visit, come to more than 729, the third year is ROR. If you landed late enough in your first year that the total stays at or under 729, the window can stretch to a third year. That is why the arrival date matters as much as the arrival year. If you land so late that the landing year falls short of both residence tests, that year is a non-resident year and the RNOR count starts a year later.

Where the edges are

Most of the arguments online come from four places.

The year you land. The Act has a special rule for a citizen of India or a person of Indian origin who is outside India and "comes on a visit" (section 6(4)): the 60-day route does not apply, so only the 182-day test does. Where that person's total income other than income from foreign sources is above ₹15 lakh, the route returns with 120 days in place of 60 (section 6(5)), and a person with 120 to 181 days is RNOR (section 6(13)(b)). Whether someone moving back for good is "coming on a visit" in the year they land is a question practitioners answer differently. The calculator treats the landing year as a move back, applying the standard tests. Take your dates to a Chartered Accountant before you rely on either reading.

Counting days. The Act sets thresholds but, in the sections read for this book, does not say whether the day of arrival and the day of departure count, and secondary sources report that rulings and practitioners differ on it. Passport stamps and boarding passes settle the facts; how to count the two boundary days is for your CA.

Visits home in the look-back. The 729-day test counts every day in India across seven years, including holidays. A household that spent two months a year in India through the whole look-back arrives with a larger starting total than one that visited for two weeks, and the second test is the one that runs out first.

Deemed residence. A citizen of India who is liable to tax in no other country, and whose income other than from foreign sources is above ₹15 lakh, is deemed resident (section 6(7)) and is RNOR (section 6(13)(c)). A US citizen or green card holder is taxed by the US, so this rule usually does not apply, although whether tax based on citizenship counts as liability "due to domicile, residence, or similar criteria" is a point to put to your CA.

What the window protects

For a resident, section 5(1) brings into total income what is received or deemed to be received in India, what accrues or arises in India, and what accrues or arises outside India. For a person who is not ordinarily resident, the third category is cut back: income that arises outside India is included only if it is derived from a business controlled in India or a profession set up in India (section 5(1)(c)).

In practice, in an RNOR year India does not tax interest, dividends and capital gains that arise and are received outside India, including in a US brokerage account, or rent from a US property, or a withdrawal from a US retirement account. The Act taxes income "received in India" in every status (section 5(1)(a)), and it does not say whether bringing money to India after it was received abroad is itself a receipt. Secondary sources describe Indian case law holding that income already received abroad is not received again when it is later brought to India, but that was not read at the judgment for this book. That is one reason the order in which money moves matters, and one more reason to ask a CA before you remit anything large.

What it never touches

• Indian income. Income that accrues or arises in India, such as rent from a flat, interest on Indian deposits and gains on Indian shares and mutual funds, is taxed whatever your status (section 5(1)(b) and 5(2)(b)).
• The US side. RNOR is an Indian status. A US citizen or green card holder stays taxed by the US on worldwide income. A non-citizen who has stopped being a US resident is taxed by the US only on US-source income, so a retirement payout still has US tax withheld and a Form 1040-NR to settle it.
• Your bank accounts. NRE, NRO and FCNR accounts follow FEMA, the foreign exchange law, which has its own test of who is resident outside India. RBI says NRE accounts should be redesignated as resident accounts, or the balance moved to an RFC account, immediately on return for employment or on a change in residential status. RNOR is a tax label and does not keep an NRE account alive. Schedule IV (serial 1) of the 2025 Act exempts NRE interest for an individual who is "resident outside India" under FEMA, and says nothing of RNOR, so on its text the exemption stops when you become resident under FEMA.

What people line up around the window

Households tend to plan four things against the window, and each has a US side as well as an Indian one.

• Selling US investments with large gains. A non-citizen who is a nonresident for US tax is generally not taxed by the US on a gain from selling securities unless they spent 183 days or more in the US that year (IRS Publication 519). If India also does not tax the gain in an RNOR year, the sale can cost nothing in either country. Once you are ROR, the reading of sections 197 and 2(101) used here is that India taxes a gain on foreign shares as a long-term gain at 12.5% before surcharge and cess when the holding is more than 24 months, because only securities listed in India get the shorter period; a CA should confirm it for your holding. Selling and buying back during the window can also raise the cost you start from, for Indian purposes later; ask your CA whether any anti-avoidance rule applies. For a US citizen or green card holder the sale is still a US taxable event, so the benefit is one-sided.
• Withdrawing from US retirement accounts. Chapter 3 and chapter 4 cover them, including the Indian relief for foreign retirement accounts.
• Holding an FCNR deposit to maturity. RBI lets it run to maturity at the contracted rate after you return. The 1961 Act exempted interest on such deposits for a non-resident or a person not ordinarily resident (clause 10(15)(iv)(fa)), and Schedule IV (serial 14) of the 2025 Act carries that clause forward "subject to the conditions as specified therein" without naming who qualifies. On that reading the interest stays exempt in RNOR years and not in ROR years, but how the 2025 Act's Schedule IV treats an RNOR holder was not confirmed and is one for your CA.
• Sorting out Indian mutual funds. Chapter 5 explains why those are Indian income in every status and what the US side adds.

A holding of $250,000 that grows at 7.0% for 8 years ends at $429,547, a gain of $179,547. If that gain is still unrealized when the RNOR years run out, it is carried into the years when India taxes a resident on worldwide income. Nothing in the sections read for this book restarts the cost when you become ROR. That is the reason some households realize gains during the window, and also why the decision is a US-tax decision first.