The number of non-resident Indian technology professionals returning to India is rising amid changes in H-1B visa rules and sluggish spending on information technology by companies. According to data from Xpheno, the number of returnees rose from 9,800 in 2024 to 15,100 in 2025. Another 7,300 have returned year-to-date in 2026. Returning NRIs need to understand how their tax status changes once they move back, as their status changes from NRI to RNOR and then to ROR, both their tax and disclosure obligations change significantly. The classic error is doing nothing during the RNOR window, then paying for it later. Returnees often delay account conversion and asset restructuring, by the time they act, the tax-friendly window has closed.
The mere act of relocation does not trigger a change in tax status. The Income-tax Act determines the status for each financial year based on the number of days of physical presence in India. According to Suresh Surana, a Mumbai-based chartered accountant, an individual becomes resident if they spend at least 182 days in India in a financial year. They may also become resident if they spend at least 60 days in India in that year and 365 days in the preceding four years. A returning NRI who has spent the past few years abroad may not meet the 365-day criterion for the past four years, making their residential status in the year of return depend mainly on the 182-day stay condition. Before you land, review your accounts and deposits, on return, confirm your RNOR status first.
A returning NRI is treated as resident but not ordinarily resident (RNOR) in the initial years. According to Sanjoli Maheshwari, executive director, Nangia & Co LLP, an individual may qualify as RNOR if they have been non-resident in India in nine out of the 10 tax years preceding the relevant year, or if their stay in India does not exceed 729 days in the seven tax years preceding the relevant year. For many returning NRIs, RNOR status may continue for one to three years. If classified as RNOR, Indian-sourced income is fully taxable in India under the standard income-tax slabs, including salary for work performed in India, rent from Indian property, and gains from Indian investments. Foreign income remains exempt except for business controlled in India or professions set up in India. The RNOR window is a planning opportunity, not just a label on your tax return. Your NRE status does not continue forever once you are back. When you become a resident, your NRE account must convert, usually to a resident account or an RFC account.
The shift from RNOR to ROR depends on long-term residency history and cumulative days of stay in India. The basic residency criteria include spending 182 days or more in India in a tax year or satisfying the 60-day-plus-365-day rule. The additional long-term conditions include being tax resident in at least two out of the preceding 10 tax years and staying in India for 729 days or more during the preceding seven years. Once the status changes from RNOR to ROR, the scope of taxation expands significantly, with worldwide income becoming fully taxable in India regardless of where it is earned or received. Once you move from RNOR to ordinary resident status, your global income is generally taxable. Plan asset sales and income timing around this shift.
NRIs face significant challenges when investing in Indian equities, with NRIs collectively holding around ₹1.4–1.5 lakh crore in Indian equities but facing taxes on dividends and capital gains in both India and their country of residence. Currency depreciation poses a silent risk, as a 10% rupee fall can wipe gains faster than a bad SIP month for dollar or dirham earners. However, GIFT City (Gujarat International Finance Tec-City) offers a solution through IFSC-registered funds with no Indian capital gains tax, making it a growing alternative for NRI investors. NRIs can use Double Taxation Avoidance Agreements (DTAA) benefits to reduce Indian dividend withholding tax from 20% to as low as 10%, but must submit Form 10F and a Tax Residency Certificate to their broker. RORs must disclose all foreign assets held at any time during the year in Schedule FA and disclose all income earned or received outside India in the tax return, including foreign bank accounts, interests in foreign trusts, overseas immovable property, and foreign equity and debt interests.
