NRIs And RNORs What You Need To Know ?
Know Your Status
Many NRIs enjoy tax benefits while abroad - but this may change once they move back. This is why it’s important to get RNOR status prior to returning.
What Is RNOR?
It stands for Resident but Not Ordinarily Resident, a transitional status given to returning NRIs before they become residents.
RNORs are treated on par with NRIs for Indian IT purposes.
Residents
A person is a resident if he/she has been in India for 182+ days in that financial year OR has been in India for 60+ days in a financial year and for 365+ days in the preceding 4 years
NRIs
You are a non-resident if you were an NRI for 9 out of the previous 10 years preceding that year; If you stayed in India for 729 days or lesser in the previous 7 years preceding that year.
RNOR Status
RNOR is an automatic status; one doesn’t have to apply for it.
It effectively gives NRIs a 2-3 year period to shift assets from abroad without attracting huge taxes as they settle in India.
Gains
RNORs get tax benefits on interest earned on FCNR deposits, capital gains from sale of foreign assets, interest/dividend on foreign deposits/securities, withdrawal from foreign retirement funds.
Bank Accounts
RFC (Resident Foreign Currency) accounts can be opened by RNORs and used to bring funds from abroad to India and hold it in any currency of one’s choice.
RFC Account
It can be opened as a term/savings deposit account and existing NRE/NRO/FCNR accounts can also be converted to an RFC account.
Interest earned is not taxable as long as you are an RNOR.
Change In Status
Once you cease to be an RNOR, you lose all tax benefits and will have to report the change of the residential status to the respective authorities.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.