RNOR · the 2-3 year window — when foreign income stays tax-free in India
Returning NRIs get a 2-3 year RNOR window where foreign income is largely tax-exempt in India. The single biggest planning lever for anyone moving back. Concentrate US stock sales, IRA conversions, and property exits in this window.
What is RNOR?
Resident but Not Ordinarily Resident — the transitional category between NRI and full ROR. Lasts up to 2-3 financial years after you return to India. Your foreign income (US salary, US capital gains, US 401(k) distributions etc) stays largely tax-exempt in India during this window.
Who qualifies for RNOR?
You qualify in any FY where you were either:
- A non-resident in 9 of the previous 10 FYs (most NRIs returning after 10+ years), OR
- In India for 729 days or fewer over the previous 7 FYs.
Most NRIs returning after a long stint abroad qualify automatically for RNOR for 2-3 years post-return.
What stays tax-free during RNOR
- Foreign salary (residual US/UK paychecks, severance)
- Foreign interest + dividend income (US brokerage, savings, IRAs)
- Foreign capital gains (US stocks, US property sale)
- Foreign rental income (US property still rented)
What's still taxable
- Indian-source income (rent on Indian property, salary if you start working in India)
- Income that "accrues" or "is received" in India even if you control it from abroad
The big planning move
Concentrate large foreign-asset realizations (US stock sales, IRA conversions, US property sale) into your RNOR window. Once you're ROR, India taxes worldwide income.