140 days in India: RNOR, foreign salary not taxed here
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- NRI income tax return, ITR-2 or ITR-3
- Choose the right ITR form, residential status and filing section
- Lower or nil TDS certificate, Form 128 (earlier Form 13)
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- AIS or 26AS
- Bank statement
- Salary slip
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Questions, answered the CA way
Facts, Provisions and law, Analysis, Conclusion.
Residential Status: ROR, RNOR, or NRI? Live Calculator
- Facts
- Your entire India tax liability depends on one answer: your residential status. Get it wrong and you either overpay (declaring global income unnecessarily) or face the Black Money Act. Enter your actual days in India for the last 10 years, get your exact status in seconds.
- Provisions and law
- Sec 6(1); Sec 6(6), RNOR; Sec 6(1A), Deemed Resident; Sec 5, Scope of income
- Analysis
- The 60-day alternative test: If you spent ≥60 days in India this year AND ≥365 days in the previous 4 years combined: you are Resident (not NRI) even though you didn't cross 182 days. Many frequent flyers fall here unknowingly. RNOR is the golden window: Returning NRIs get 1-2 years of RNOR status, all foreign income stays exempt during this period. Critical to repatriate foreign assets and convert NRE accounts BEFORE becoming ROR. Days counting rules: Day of arrival = counted. Day of departure = NOT counted. Count Sundays, holidays, medical stays, all days in India count. Passport stamps are the evidence, IT department can and does verify. Deemed resident trap: Living in UAE/GCC (zero tax jurisdiction) + earning ₹15L+ from India → Finance Act 2020 says you are deemed resident. Cannot be "stateless" for tax purposes. India taxes your global income.
- Conclusion
- Count exact days in India using passport: current FY (Apr to Mar)
- Count days in preceding 4 FYs (for 60-day alternative test)
- Count days in preceding 7 FYs (for RNOR 729-day test)
- Count years as NRI in preceding 10 years (for RNOR 9-of-10 test)
RNOR Window: The Returning NRI's Most Valuable Tax Period
- Facts
- RNOR (Resident but Not Ordinarily Resident) is the tax-free bridge between NRI and full Indian resident status. During RNOR, you are physically back in India but your foreign income stays exempt. This window lasts 1-2 years. Most returning NRIs don't know it exists, and lose it forever by not planning.
- Provisions and law
- Sec 6(6)(a); Sec 6(6)(b); Sec 5(1), RNOR scope; FEMA, NRE account
- Analysis
- The biggest RNOR mistake: Returning NRI converts NRE savings account to Resident Savings Account on Day 1 of return. NRE interest was exempt. Resident savings interest: taxable. Converting too early = unnecessary tax on foreign savings. What to do during RNOR: (1) Keep NRE account as-is or convert to RFC. (2) Bring back foreign funds while exempt. (3) Sell foreign property and repatriate before becoming ROR (else capital gains taxed in India). (4) Surrender ESOPs of foreign employer (RNOR: only India-source perquisite taxed). RNOR and foreign salary: If you return but your old foreign employer pays you for work done before return: RNOR status means that salary received abroad is fully exempt. Work done in India for Indian employer: taxable from Day 1. The 2-year window math: ₹50L foreign savings earning 3% abroad = ₹1.5L/year. Under RNOR: tax-free.
- Conclusion
- Determine RNOR window duration: 9-of-10 years NRI = 2 years; fewer years = 1 year or none
- DO NOT convert NRE account to resident account immediately, keep or convert to RFC
- List all foreign income sources: salary, interest, capital gains, rental, dividends
- Plan repatriation: bring foreign funds to India before RNOR expires
NRI Property Sale: TDS 20 to 30% by Buyer (Section 393, old 195)
- Facts
- When an NRI sells property in India, the buyer must deduct TDS at 20% (LTCG rate) or 30% (STCG rate) on the ENTIRE sale consideration, not just the gain. This is the most commonly mishandled NRI transaction. A ₹1Cr property sale → buyer must deduct ₹20L in TDS. NRI then claims refund after filing ITR.
- Provisions and law
- Sec 393 (old 195); Rule 220 (old Rule 37BB); Sec 248; Sec 200
- Analysis
- The TDS problem: Section 393, Income-tax Act 2025 (old Sec 195) requires TDS on the ENTIRE consideration (not just gain). ₹1Cr property → buyer must deduct 20% = ₹20L TDS from payment to NRI seller. NRI receives ₹80L. NRI then files ITR, computes actual LTCG (say ₹30L), tax on LTCG ₹3.75L (12.5%), claims refund of ₹20L − ₹3.75L = ₹16.25L. Refund takes 6-12 months. Lower TDS certificate, the solution: NRI seller applies to Assessing Officer (under Sec 393 (old Sec 195(2)) or Sec 248) for a certificate allowing lower TDS. Certificate specifies TDS only on the actual capital gains portion, not full consideration. This dramatically reduces upfront TDS. Process takes 30-60 days. NRI seller should apply well before property transaction. DTAA benefit: Many DTAA (India-USA, India-UK, India-UAE etc.) allow lower TDS rates or provide that capital gains from immovable property are taxed only in the country where property is situated (India).
- Conclusion
- Buyer: Confirm seller is NRI (check FEMA status, check NRO/NRE account, check PAN with non-resident status)
- Seller: Apply for lower TDS certificate from IT AO at least 45-60 days before transaction
- CA: Prepare Form 146 (old Form 15CB), computation of LTCG, applicable tax rate, DTAA benefit if any
- Buyer: Deduct TDS at 20% (LTCG) or 30% (STCG) on full consideration unless lower certificate obtained
Mahila Samman Savings Certificate: 7.5% for women, 2-year lock
- Facts
- Launched in Budget 2023, the Mahila Samman Savings Certificate is available exclusively for women and girls. Rate: 7.5% p.a. (compounded quarterly, paid at maturity). Max deposit: ₹2L per account. Tenure: 2 years (March 2023 to March 2025 issue period, check current availability at post offices).
- Provisions and law
- Mahila Samman Savings Certificate 2023 | Post Office | IT Act
- Analysis
- Key difference from SCSS: Mahila Samman pays on maturity (not quarterly). Better for those who don't need interim cash flow. No Sec 123, Income-tax Act 2025 (old Sec 80C) deduction, interest is taxable. Partial withdrawal: Allowed once after 6 months, up to 40% of the balance. Premature closure after 1 year with 2% penalty on interest. ₹2L at 7.5% for 2 years = ₹2,32,044 at maturity (gross). After tax at 30%: ₹2,22,430 net. Compare with FD at 6.5% for 2 years = ₹2,27,056 gross, ₹2,18,939 net, Mahila Samman wins post-tax too.
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