NRI Taxation and Compliance (Part 5): Returning to India – RNOR, Accounts and Foreign Assets
Moving back to India? RNOR window, NRE/NRO redesignation, RFC account, Schedule FA disclosure and FEMA rules for returning NRIs.
After eleven years in Dubai, Kiran is moving back to Hyderabad. His NRE deposits, foreign shares and ESOPs all come with him. Which rules change on the day he lands, and which only after a few months?
- Part 1: Residential status
- Part 2: Income taxation
- Part 3: Property
- Part 4: Banking and investments
- Part 5: Returning to India (you are here)
- Part 6: Investing in Indian businesses
- Part 7: Gifts, inheritance and succession
- Part 8: TDS, Section 195 and Forms 15CA/15CB
- Part 9: Return filing, refunds and notices
1. Two residence tests
| FEMA | Income tax | |
|---|---|---|
| Question | Are you a person resident in India? | Are you resident, RNOR or non-resident? |
| Test | Came to India for employment, business or an indefinite stay (intention-based) | Days of stay in the tax year, plus past stay history |
| Effect | Accounts and foreign assets must be redesignated or regularised | Scope of Indian taxation of global income |
2. The RNOR window
A returning person who is resident in India for the tax year is typically RNOR if they were non-resident in 9 of the 10 preceding years, or stayed 729 days or fewer in the preceding 7 years (confirm exact conditions for the year in the Income-tax Act, 2025 section 6). In the RNOR years, income earned and received outside India is generally outside the Indian tax net, unless it comes from a business controlled in India. Note that the Act also has a rule for Indian citizens with total Indian income above Rs 15 lakh (confirm).
3. Bank accounts when you return
| Account | What to do |
|---|---|
| NRE (savings and fixed) | Redesignate to a resident account or to an RFC account; deposits can run until maturity in some cases (confirm bank policy) |
| NRO | Redesignate to a resident savings account |
| FCNR(B) | May continue until maturity at the contracted rate; interest tax-exempt only while you are RNOR or non-resident for tax (confirm) |
| RFC account | Resident foreign currency account for returned NRIs; funds can be kept in foreign currency |
Interest on NRE accounts is tax-free only while you are non-resident. As soon as you become a FEMA resident, the bank must treat the account accordingly, and income tax depends on your tax residence.
ComplianceKart plans the timing, RNOR benefit, account redesignation and foreign asset disclosure before you land. See our NRI and FEMA service.
4. Foreign assets and income
| Topic | Position |
|---|---|
| Foreign assets acquired while NRI | May generally be held after return, subject to FEMA conditions (confirm) |
| Foreign ESOPs and shares | Disclose in Schedule FA of the ITR once you are resident (not RNOR-exempt for disclosure; confirm) |
| Black Money Act | Non-disclosure of foreign assets can lead to penalties; disclose correctly |
| Foreign tax credit | Form 67 for claiming credit of tax paid abroad |
5. Mistakes returnees make
- Landing before checking the RNOR calculation.
- Leaving NRE accounts unchanged after becoming resident.
- Not disclosing foreign accounts and ESOPs in Schedule FA.
- Assuming foreign income is always tax-free in India.
- Missing foreign tax credit paperwork (Form 67).
- Not updating KYC, PAN and Aadhaar linkage.
Why work with ComplianceKart
ComplianceKart is a boutique practice bringing Chartered Accountants, Company Secretaries and advocates under one roof. Think of a multi-speciality hospital: the physician, the radiologist and the pharmacist read from one patient file, so you never carry reports between buildings. Return planning involves FEMA, income tax and often company-law questions on business interests. A multi-disciplinary team reads them together before you land.
Frequently Asked Questions
Will I be taxed on foreign income when I return?
Possibly not for RNOR years, subject to conditions. Confirm your status each year.
Do I need to close NRE accounts?
You must redesignate them once you are a resident under FEMA, according to bank procedure.
Can I keep foreign investments?
Generally yes, subject to FEMA and disclosure requirements.
What is Schedule FA?
The part of the ITR that discloses foreign assets and accounts of residents.
Should I plan before arrival?
Yes, timing affects RNOR eligibility.
Sources
- Income-tax Act, 2025, section 6 (residential status) and Black Money Act, 2015
- FEMA Act, 1999 section 2(v) and RBI Master Direction on Foreign Exchange
- FEMA Notification on Foreign Currency Accounts by residents (RFC)
Ready to act? Start with our FEMA and NRI compliance service, check pricing, or contact us.
WhatsApp usEmail team@compliancekart.comCall 9959536391
Educational article, last updated 11 November 2026. General information, not advice on a specific case. Laws and due dates change; confirm on the date you act. Items marked (confirm) came from secondary sources and need checking against the official text.
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