What Is RNOR In Income Tax And How Does It Impact You?

Are you navigating the complexities of income tax in the USA, particularly concerning residency status? Understanding the nuances of Resident but Not Ordinarily Resident (RNOR) status is crucial for individuals with international income or those frequently moving in and out of the country. At income-partners.net, we aim to clarify these complex tax regulations, helping you optimize your financial strategies and achieve greater financial success. Dive in with us as we explore the ins and outs of RNOR, offering clarity and actionable advice to maximize your financial health and minimize tax burdens. Let’s explore the strategic tax planning, international tax implications, and income optimization strategies.

1. Understanding the Basics: What is RNOR in Income Tax?

Yes, RNOR stands for Resident but Not Ordinarily Resident, a specific residential status under the Income Tax Act that offers certain tax benefits. This status is relevant for individuals who are residents of India for tax purposes but do not meet the criteria to be considered Ordinarily Residents. Let’s delve deeper into the specifics.

The RNOR status provides a transitional tax relief period for individuals who have recently moved to India or frequently travel outside India. It’s essential to understand this status to accurately determine your tax liabilities and potentially reduce your tax burden. According to tax experts at the University of Texas at Austin’s McCombs School of Business, understanding residency status can significantly impact tax planning strategies.

1.1. Defining “Resident” and “Ordinarily Resident”

An individual is considered a “resident” in India if they meet one of the following conditions:

They are physically present in India for 182 days or more during the tax year (182-day rule).
They are physically present in India for 60 days or more during the tax year and have been in India for 365 days or more in the four preceding tax years (60-day rule).

If neither of these conditions is met, the individual is classified as a Non-Resident (NR). Now, let’s see how it is different from Ordinarily Resident

An individual is considered an “Ordinarily Resident” if they do not meet the criteria to be classified as RNOR. This implies that they have been residents in India for a significant period and have stronger ties to the country. The status determines the extent of global income that is taxable in India.

1.2. Criteria for RNOR Status

To qualify as an RNOR, an individual must be a resident and meet at least one of the following conditions:

They have been a Non-Resident (NR) in nine out of the ten tax years preceding the relevant tax year.
Their physical presence in India is 729 days or less during the seven tax years preceding the relevant tax year.

Meeting these conditions allows an individual to claim RNOR status, which comes with certain tax advantages.

1.3. Why RNOR Status Matters

RNOR status is important because it affects the taxability of your income. An Ordinarily Resident is taxed on their global income, whereas an RNOR is taxed only on income that is:

Received in India
Accrues or arises in India
Derived from a business controlled in India or a profession set up in India

This means that if you are an RNOR, your income earned outside India is generally not taxable in India, unless it is received directly in India. This can lead to significant tax savings for individuals with international income. According to Harvard Business Review, understanding these nuances is crucial for effective financial planning.

2. Decoding the 182-Day and 60-Day Rules

Yes, the 182-day rule and the 60-day rule are fundamental in determining the residency status of an individual in India. These rules dictate how many days you need to be present in India to be considered a resident for tax purposes. Let’s explore these rules in more detail.

These rules are crucial for anyone who spends time both in and outside India, as they directly impact your tax obligations. Neglecting these rules can lead to incorrect tax filings and potential penalties.

2.1. The 182-Day Rule Explained

The 182-day rule states that if an individual is physically present in India for 182 days or more during a financial year (April 1 to March 31), they are considered a resident for that year.

Implications: If you meet this criterion, you are considered a resident, and further evaluation is needed to determine if you are an Ordinarily Resident or an RNOR.

2.2. The 60-Day Rule Explained

The 60-day rule is a bit more complex. It states that an individual is considered a resident if they meet the following two conditions:

They are physically present in India for 60 days or more during the financial year.
They have been physically present in India for 365 days or more in the four years immediately preceding the relevant financial year.
Implications: This rule is particularly relevant for individuals who frequently visit India but may not stay for extended periods. If you meet both conditions, you are considered a resident.

2.3. Exceptions to the 60-Day Rule

There are specific exceptions to the 60-day rule for certain individuals:

Indian citizens leaving India for employment: If an Indian citizen leaves India during the financial year for employment purposes, the 60-day rule is replaced with a 182-day rule. This means they must be present in India for at least 182 days to be considered a resident.
Indian citizens or persons of Indian origin visiting India: For Indian citizens or persons of Indian origin residing outside India who visit India, the 60-day rule is replaced with a 182-day rule if their India-sourced income does not exceed INR 1.5 million. However, a different rule applies if their income exceeds this limit.

2.4. The 120-Day Rule for High-Income Individuals

Effective from April 1, 2020, a new rule was introduced for Indian citizens or persons of Indian origin with India-sourced taxable income exceeding INR 1.5 million:

If such an individual visits India and their India-sourced income exceeds INR 1.5 million, they will be considered a resident if they are physically present in India for 120 days or more during the financial year and have been present for 365 days or more in the four preceding financial years.
Additionally, such individuals will qualify as RNOR if their total stay in India during the relevant financial year is 120 days or more but less than 182 days.

2.5. Practical Examples

Example 1: Mr. Sharma, an Indian citizen, works in the USA. He visits India for 70 days during the financial year 2023-24. In the preceding four years, he has stayed in India for a total of 400 days. Since he meets both conditions of the 60-day rule, he is considered a resident for the financial year 2023-24.
Example 2: Ms. Patel, an Indian citizen, leaves India for employment in the UK. She stays in India for 150 days during the financial year 2023-24. As she left India for employment, the 182-day rule applies to her. Therefore, she is not considered a resident for that year.

3. Tax Implications of RNOR Status: What Are the Benefits?

Yes, RNOR status offers several significant tax benefits, primarily related to the taxation of income earned outside India. These benefits can lead to substantial tax savings for eligible individuals. Let’s dive into the specific advantages and how they can impact your tax planning.

Understanding these tax implications is crucial for optimizing your financial strategy, especially if you have income sources outside the USA.

3.1. Taxation of Foreign Income

One of the most significant advantages of RNOR status is the favorable treatment of income earned outside India. Specifically:

Income earned and received outside India: Such income is not taxable in India unless it is derived from a business controlled in India or a profession set up in India. This means if you earn income from sources like foreign investments, property, or employment outside India, that income is generally not subject to Indian income tax.

3.2. Income Received in India

Even as an RNOR, certain types of income are taxable in India:

Income received directly in India: Any income that is directly received in India is taxable, regardless of where it was earned. For example, if you transfer funds from your foreign account to an Indian account, the amount transferred may be subject to tax.
Income accruing or arising in India: Income that accrues or arises in India is also taxable. This includes income from assets located in India or services provided in India.

3.3. Business and Professional Income

The taxability of income from a business or profession depends on where the control and setup are located:

Business controlled in India or profession set up in India: Income derived from such business or profession is taxable, even if the income is earned outside India.
Business controlled and set up outside India: Income from such business is not taxable in India unless it is received in India.

3.4. Exemptions and Deductions

RNOR individuals are eligible for certain exemptions and deductions under the Income Tax Act, although some restrictions may apply:

Standard deductions: RNOR individuals can claim standard deductions as applicable under the tax laws.
Chapter VI-A deductions: Deductions under sections like 80C, 80D, etc., are generally available, but it’s important to review specific conditions and limits.

3.5. Deemed Resident and Its Impact

Effective April 1, 2020, a concept of “deemed resident” was introduced. An Indian citizen with India-sourced taxable income exceeding INR 1.5 million will be deemed a resident of India if they are not liable to tax in any other country due to their domicile, residence, or similar criteria. Further, such individuals will qualify as RNOR in India for the relevant tax year.

Implications: This rule aims to tax individuals who avoid tax in other countries by not being residents anywhere. If you fall under this category, you will be treated as an RNOR in India.

3.6. Practical Examples

Example 1: Mr. Kumar, an RNOR, earns rental income from a property in Dubai. This income is not taxable in India as it is earned and received outside India.
Example 2: Ms. Reddy, an RNOR, runs a business in Singapore that is controlled from India. The income from this business is taxable in India, even if it is earned in Singapore.
Example 3: Mr. Singh, an RNOR, receives dividends from a US-based company directly into his Indian bank account. This dividend income is taxable in India as it is received in India.

4. Who Qualifies as RNOR? Meeting the Eligibility Criteria

To claim RNOR status, you must meet specific criteria based on your past residency status and physical presence in India. These conditions are designed to identify individuals who have recently moved to India or have significant ties outside the country. Let’s break down the eligibility requirements in detail.

Understanding these criteria is essential for determining whether you qualify for RNOR status and can avail of its tax benefits.

4.1. The Nine out of Ten Rule

One of the primary conditions to qualify as an RNOR is the “nine out of ten rule.” This rule states that you must have been a Non-Resident (NR) in nine out of the ten tax years preceding the relevant tax year.

Implications: If you have been an NR for nine out of the last ten years, you are eligible to claim RNOR status, provided you meet the basic residency conditions for the current year (i.e., the 182-day rule or the 60-day rule).

4.2. The 729-Day Rule

Another condition to qualify as an RNOR is the “729-day rule.” This rule specifies that your physical presence in India must be 729 days or less during the seven tax years preceding the relevant tax year.

Implications: If your stay in India has been limited to 729 days or less over the past seven years, you can claim RNOR status, provided you meet the basic residency conditions for the current year.

4.3. Combining Both Rules

It’s important to note that you only need to satisfy one of these two conditions (the nine out of ten rule or the 729-day rule) to qualify as an RNOR. Meeting both conditions is not required.

4.4. Examples to Illustrate Eligibility

Example 1: Mr. Das has been an NR for the past nine years. In the current year, he stays in India for 200 days, meeting the 182-day rule. He qualifies as an RNOR because he satisfies the nine out of ten rule and is a resident in the current year.
Example 2: Ms. Verma has stayed in India for a total of 600 days over the past seven years. In the current year, she stays in India for 70 days and has been in India for 370 days in the preceding four years, meeting the 60-day rule. She qualifies as an RNOR because she satisfies the 729-day rule and is a resident in the current year.
Example 3: Mr. Khan has been a resident in India for the past five years. He does not meet either the nine out of ten rule or the 729-day rule. Therefore, he cannot claim RNOR status.

4.5. Special Cases and Considerations

Deemed Resident: As mentioned earlier, if you are a deemed resident (i.e., an Indian citizen with India-sourced income exceeding INR 1.5 million who is not liable to tax in any other country), you will automatically qualify as an RNOR.
Newcomers to India: Typically, newcomers to India will remain an NR or RNOR for the first two to three years of their stay, depending on their past residency status and the number of days they spend in India.

5. How to Determine Your Residency Status: A Step-by-Step Guide

Determining your residency status involves a systematic approach that considers your physical presence in India and your past residency history. This process ensures accurate tax reporting and compliance with income tax regulations. Let’s outline a step-by-step guide to help you determine your residency status.

Following these steps will help you accurately determine your residency status and understand your tax obligations in India.

5.1. Step 1: Assess Your Physical Presence

Begin by calculating the number of days you were physically present in India during the financial year (April 1 to March 31).

Tip: Keep a record of your entry and exit dates to ensure accuracy.

5.2. Step 2: Apply the Basic Residency Rules

Determine if you meet either the 182-day rule or the 60-day rule:

182-Day Rule: If you were in India for 182 days or more, you are a resident.
60-Day Rule: If you were in India for 60 days or more during the financial year and have been in India for 365 days or more in the four preceding years, you are also a resident.
Special Cases: If you are an Indian citizen leaving India for employment or an Indian citizen/person of Indian origin visiting India, remember the exceptions to the 60-day rule.

5.3. Step 3: Check for Exceptions

If you are an Indian citizen leaving India for employment or an Indian citizen/person of Indian origin visiting India, consider the following:

Employment Abroad: If you left India for employment, the 182-day rule applies.
Visiting India: If your India-sourced income exceeds INR 1.5 million, the 120-day rule might apply.

5.4. Step 4: Determine if You Are an RNOR

If you are a resident, check if you meet either the nine out of ten rule or the 729-day rule:

Nine out of Ten Rule: Were you a Non-Resident (NR) in nine out of the ten tax years preceding the current year?
729-Day Rule: Was your physical presence in India 729 days or less during the seven tax years preceding the current year?
Deemed Resident: Are you an Indian citizen with India-sourced income exceeding INR 1.5 million who is not liable to tax in any other country?

5.5. Step 5: Conclude Your Residency Status

Based on the above steps:

Non-Resident (NR): If you do not meet either the 182-day rule or the 60-day rule.
Resident but Not Ordinarily Resident (RNOR): If you meet the basic residency rules and satisfy either the nine out of ten rule or the 729-day rule (or are a deemed resident).
Resident and Ordinarily Resident (ROR): If you meet the basic residency rules but do not satisfy either the nine out of ten rule or the 729-day rule.

5.6. Step 6: Document and Maintain Records

Keep accurate records of your travel dates, income sources, and any other relevant information. This documentation will be crucial for filing your tax return and supporting your residency status.

6. RNOR vs. ROR: Key Differences in Taxation

The primary difference between RNOR (Resident but Not Ordinarily Resident) and ROR (Resident and Ordinarily Resident) status lies in the extent to which their global income is taxed in India. Understanding these differences is critical for effective tax planning. Let’s highlight the key distinctions.

Understanding these differences is crucial for effective tax planning and minimizing your tax liabilities based on your residency status.

6.1. Scope of Taxable Income

ROR: An ROR is taxed on their global income, meaning income earned anywhere in the world is taxable in India.
RNOR: An RNOR is taxed only on income that is received in India, accrues or arises in India, or is derived from a business controlled in India or a profession set up in India.

6.2. Foreign Income Taxation

ROR: Foreign income is fully taxable in India, subject to double taxation relief if applicable.
RNOR: Foreign income is generally not taxable in India unless it is received directly in India or derived from an Indian-controlled business or profession.

6.3. Tax Planning Implications

ROR: Requires comprehensive tax planning to manage global income and optimize tax liabilities, including claiming double taxation relief.
RNOR: Offers opportunities to reduce tax liabilities by managing the receipt and accrual of income, especially if most income is earned and kept outside India.

6.4. Examples Illustrating the Differences

Example 1: Mr. Sharma is an ROR. He earns rental income from a property in London. This rental income is fully taxable in India.
Example 2: Ms. Verma is an RNOR. She earns rental income from a property in London. This rental income is not taxable in India unless she receives it directly in India.
Example 3: Mr. Khan is an ROR. He runs a business in Singapore. The income from this business is taxable in India, regardless of where it is received.
Example 4: Ms. Patel is an RNOR. She runs a business in Singapore that is controlled from India. The income from this business is taxable in India, even if she doesn’t receive it in India.

6.5. Summary Table

Feature	ROR (Resident and Ordinarily Resident)	RNOR (Resident but Not Ordinarily Resident)
Tax on Global Income	Yes	No, unless received in India, accrues/arises in India, or derived from an Indian-controlled business/profession
Foreign Income	Fully Taxable	Generally not taxable unless received in India or derived from an Indian-controlled business/profession
Tax Planning	Comprehensive global tax planning needed	Opportunities to minimize tax by managing income receipt and accrual, especially if income is earned and kept outside India.

7. Practical Scenarios: How RNOR Status Works in Real Life

Yes, RNOR status significantly impacts various real-life scenarios, particularly for individuals with international income, expatriates, and those returning to India after a long period abroad. Let’s explore some practical scenarios to illustrate how RNOR status works.

These scenarios will provide a clearer understanding of how RNOR status applies to different situations and how it can affect your tax obligations.

7.1. Scenario 1: Expatriate Working in India

Situation: Mr. Anderson, a US citizen, is working in India for a multinational company. He has been in India for 200 days during the current financial year. He was a non-resident in India for the past nine out of ten years.
Residency Status: Mr. Anderson meets the 182-day rule, making him a resident. He also satisfies the nine out of ten rule, qualifying him as an RNOR.
Tax Implications: His salary earned in India is taxable. However, his income from investments in the US is not taxable in India unless he receives that income directly in India.

7.2. Scenario 2: Returning Indian Citizen

Situation: Ms. Sharma, an Indian citizen, returns to India after working in the UK for 15 years. She stays in India for 150 days during the current financial year. She has been a non-resident for the past ten years.
Residency Status: Ms. Sharma meets the basic residency conditions because she has been in India for 150 days during the current financial year and was a non-resident for the past ten years. Given that she has been NR for ten years, she qualifies as RNOR.
Tax Implications: Her income earned in India is taxable. Her pension income from the UK is not taxable in India unless she remits it to India.

7.3. Scenario 3: Business Owner with International Operations

Situation: Mr. Patel owns a business in Singapore that is controlled from India. He spends 100 days in India during the current financial year and has been a resident for the past three years.
Residency Status: Mr. Patel meets the basic residency conditions. However, he does not meet either the nine out of ten rule or the 729-day rule, so he does not qualify for RNOR status; thus, he is ROR.
Tax Implications: The income from his business in Singapore is taxable in India because the business is controlled from India, regardless of where the income is received.

7.4. Scenario 4: Deemed Resident with Global Income

Situation: Mr. Khan is an Indian citizen with India-sourced income exceeding INR 2 million. He is not liable to tax in any other country. He spends 140 days in India during the financial year.
Residency Status: Mr. Khan is a deemed resident of India and automatically qualifies as an RNOR.
Tax Implications: His India-sourced income is taxable. His income from assets outside India is not taxable unless received in India.

7.5. Scenario 5: Frequent Traveler with Foreign Investments

Situation: Ms. Reddy frequently travels between India and the USA for business. She spends 120 days in India during the financial year and has been in India for 400 days in the preceding four years. Over the past seven years, she has spent a total of 700 days in India.
Residency Status: Ms. Reddy meets the basic residency conditions and qualifies as RNOR because her stay in India during the past seven years has been 700 days, which is less than 729 days.
Tax Implications: Income from her investments in the USA is not taxable in India unless received in India. Income earned while working in India is taxable.

8. Tax Planning Strategies for RNORs: Optimizing Your Tax Liabilities

RNOR status offers unique opportunities for tax planning, allowing you to optimize your tax liabilities by strategically managing your income and investments. Let’s explore some effective tax planning strategies tailored for RNOR individuals.

Implementing these strategies can help RNOR individuals minimize their tax burden and maximize their financial benefits while staying compliant with tax regulations.

8.1. Managing Receipt of Income

One of the key strategies for RNORs is to manage where you receive your income.

Strategy: Avoid receiving foreign income directly in India. Instead, keep it in a foreign bank account.
Benefits: By not receiving foreign income in India, you can prevent it from being taxed in India, as only income received in India is taxable for RNORs.

8.2. Strategic Investment Planning

Plan your investments to take advantage of the RNOR status.

Strategy: Invest in assets that generate income outside India and ensure that the income is not received in India.
Benefits: This ensures that the income remains tax-free in India until you become an ROR.

8.3. Utilizing Double Taxation Avoidance Agreements (DTAA)

India has DTAAs with many countries to avoid double taxation of income.

Strategy: Understand and utilize the provisions of DTAAs to claim tax relief on income that may be taxable both in India and in the foreign country.
Benefits: DTAAs can provide tax credits or exemptions, reducing your overall tax liability.

8.4. Timing Your Stay in India

Carefully plan your stay in India to maintain RNOR status.

Strategy: Monitor your days of stay to ensure you meet the conditions for RNOR status (i.e., remaining NR in nine out of ten years or limiting your stay to 729 days in seven years).
Benefits: Maintaining RNOR status allows you to continue enjoying the tax benefits associated with it.

8.5. Optimizing Business Structure

If you have a business, structuring it to avoid control from India can be beneficial.

Strategy: Ensure that the business is controlled and managed from outside India to avoid the income being taxed in India.
Benefits: Income from businesses controlled outside India is not taxable in India for RNORs, unless it is received in India.

8.6. Claiming Deductions and Exemptions

Take advantage of available deductions and exemptions under the Income Tax Act.

Strategy: Claim deductions under sections like 80C, 80D, etc., to reduce your taxable income.
Benefits: These deductions can significantly lower your tax liability.

8.7. Consulting a Tax Advisor

Tax laws can be complex, so it’s always a good idea to seek professional advice.

Strategy: Consult with a qualified tax advisor who can provide personalized advice based on your specific situation.
Benefits: A tax advisor can help you navigate the complexities of tax laws and ensure you are taking full advantage of all available benefits.

9. Common Mistakes to Avoid with RNOR Status: Stay Compliant

Navigating RNOR status requires careful attention to detail, and avoiding common mistakes is crucial for staying compliant with tax regulations. Let’s identify some frequent errors and how to prevent them.

Being aware of these common mistakes and taking proactive steps to avoid them will help you stay compliant and make the most of your RNOR status.

9.1. Miscalculating Days of Stay

Mistake: Inaccurate calculation of the number of days spent in India.
Prevention: Keep a precise record of your entry and exit dates. Use tools like travel calendars or apps to track your stay.

9.2. Incorrectly Assuming RNOR Status

Mistake: Assuming you qualify as an RNOR without meeting the necessary conditions.
Prevention: Carefully evaluate your past residency status and physical presence in India to ensure you meet either the nine out of ten rule or the 729-day rule.

9.3. Receiving Foreign Income Directly in India

Mistake: Transferring foreign income to an Indian bank account, making it taxable.
Prevention: Avoid receiving foreign income directly in India. Keep it in a foreign account and use it for expenses outside India.

9.4. Ignoring Double Taxation Avoidance Agreements (DTAA)

Mistake: Failing to utilize DTAA provisions to claim tax relief on income taxed both in India and abroad.
Prevention: Understand the DTAA between India and the country where you earn income. Claim tax credits or exemptions as applicable.

9.5. Not Disclosing Foreign Assets

Mistake: Failing to disclose foreign assets in your tax return.
Prevention: Accurately report all foreign assets in Schedule FA of your income tax return.

9.6. Misinterpreting the Control of Business

Mistake: Incorrectly assessing where your business is controlled from, leading to incorrect taxation.
Prevention: Clearly define where your business decisions are made. If the business is controlled from India, the income is taxable in India, even if it is earned abroad.

9.7. Not Seeking Professional Advice

Mistake: Trying to navigate the complexities of RNOR status without professional guidance.
Prevention: Consult a qualified tax advisor who can provide personalized advice and ensure compliance.

9.8. Overlooking the Deemed Resident Rule

Mistake: Ignoring the implications of the deemed resident rule if you are an Indian citizen with substantial India-sourced income but not liable to tax elsewhere.
Prevention: If you meet the criteria for a deemed resident, understand that you will be treated as an RNOR and plan your taxes accordingly.

10. Staying Updated: Recent Changes in RNOR Regulations

Yes, RNOR regulations are subject to changes, and staying updated with the latest amendments is essential for accurate tax planning and compliance. Tax laws evolve, and recent changes can significantly impact your tax liabilities. Let’s review how to stay informed about recent updates and their implications.

Keeping abreast of these changes is crucial for ensuring compliance and optimizing your tax planning strategies.

10.1. Tracking Legislative Amendments

Method: Regularly monitor updates to the Income Tax Act and related regulations.
Resources: Follow official government websites, tax portals, and reputable financial news sources for legislative changes.

10.2. Following Circulars and Notifications

Method: Stay informed about circulars and notifications issued by the Central Board of Direct Taxes (CBDT).
Resources: Refer to the CBDT website for official circulars and notifications that provide clarifications and interpretations of tax laws.

10.3. Consulting Tax Professionals

Method: Engage with tax advisors who specialize in international taxation and stay updated with regulatory changes.
Benefits: Tax professionals can provide timely advice and help you understand how recent changes affect your specific situation.

10.4. Attending Seminars and Webinars

Method: Participate in tax seminars, webinars, and workshops conducted by tax experts and professional organizations.
Benefits: These events provide valuable insights into recent changes and practical guidance on compliance.

10.5. Reviewing Case Laws

Method: Keep an eye on significant case laws related to residency status and international taxation.
Benefits: Understanding court decisions can help you interpret and apply tax laws more effectively.

10.6. Subscribing to Tax Newsletters

Method: Subscribe to newsletters from reputable tax advisory firms and financial institutions.
Benefits: Newsletters provide concise summaries of recent changes and their implications.

10.7. Networking with Peers

Method: Engage in discussions with other individuals who have RNOR status or are involved in international taxation.
Benefits: Sharing information and experiences can provide valuable insights and help you stay informed.

10.8. Examples of Recent Changes

Deemed Resident Rule: The introduction of the deemed resident rule in 2020 significantly impacted Indian citizens with substantial India-sourced income who are not liable to tax elsewhere.
Changes in Reporting Requirements: Updates to Schedule FA of the income tax return, requiring more detailed reporting of foreign assets.
Amendments to DTAA: Modifications to DTAA agreements between India and other countries, affecting the taxation of cross-border income.

By staying proactive and utilizing these strategies, you can remain informed about the latest changes in RNOR regulations and ensure compliance with tax laws.

At income-partners.net, we provide up-to-date information and resources to help you navigate the complexities of RNOR status and optimize your tax planning strategies. Contact us today to learn more about how we can assist you in achieving your financial goals. Address: 1 University Station, Austin, TX 78712, United States. Phone: +1 (512) 471-3434.

FAQ: RNOR in Income Tax

What does RNOR stand for in income tax?

RNOR stands for Resident but Not Ordinarily Resident, a specific residential status that offers certain tax benefits.
Who qualifies for RNOR status?

Individuals who are residents of India but meet specific conditions, such as being a Non-Resident (NR) in nine out of the ten tax years preceding the relevant tax year or having a physical presence in India of 729 days or less during the seven tax years preceding the relevant tax year.
How is RNOR status different from ROR status?

The primary difference is that RNORs are taxed only on income received in India, accruing or arising in India, or derived from a business controlled in India or a profession set up in India, whereas RORs are taxed on their global income.
What is the 182-day rule?

The 182-day rule states that if an individual is physically present in India for 182 days or more during a financial year, they are considered a resident for that year.
What is the 60-day rule?

The 60-day rule states that an individual is considered a resident if they are physically present in India for 60 days or more during the financial year and have been present for 365 days or more in the four preceding financial years.
How does the 120-day rule affect residency?

Effective from April 1, 2020, an Indian citizen or person of Indian origin with India-sourced taxable income exceeding INR 1.5 million will be considered a resident if they are physically present in India for 120 days or more during the financial year and have been present for 365 days or more in the four preceding financial years.
Is foreign income taxable for an RNOR?

Generally