India Tax Residency & RNOR Status
India tax residency: resident, non-resident, RNOR (Resident but Not Ordinarily Resident) status, 182-day and 120-day tests, RNOR foreign income exemption. Trigger on: "India tax resident", "RNOR India", "resident not ordinarily resident", "India 182 days rule", "India NRI tax", "NRI returning Ind…
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Key facts — India, 2025
| Category | Tests | Taxed on |
|---|---|---|
| Resident and Ordinarily Resident (ROR) | See below | Worldwide income |
| Resident but Not Ordinarily Resident (RNOR) | See below | India-source + foreign income from India business/profession |
| Non-Resident (NR) | Neither test met | India-source income only |
The full rule
Quick reference
| Category | Tests | Taxed on |
|---|---|---|
| Resident and Ordinarily Resident (ROR) | See below | Worldwide income |
| Resident but Not Ordinarily Resident (RNOR) | See below | India-source + foreign income from India business/profession |
| Non-Resident (NR) | Neither test met | India-source income only |
Step 2: Ordinary Resident or RNOR?
A resident is Not Ordinarily Resident (NOR/RNOR) if:
- Has been a non-resident in India in 9 or more of the previous 10 years, OR
- Has been in India for a total of 729 days or less in the previous 7 years
Otherwise → Resident and Ordinarily Resident (ROR).
RNOR: the key benefit
An RNOR is taxed only on:
- Income accruing/arising in India
- Income received in India
- Income from a business/profession controlled from or set up in India
Foreign income that is NOT from an India business → not taxed in India for RNOR.
This is important for returning NRIs: in the first 1–2 years after returning to India, they are often RNOR and their foreign-source investment income, foreign property rental, and foreign employment income are not taxable in India.
Capital gains under each status
| Asset | ROR | RNOR | NR |
|---|---|---|---|
| Indian shares | Taxed | Taxed | Taxed |
| Foreign shares | Taxed | Not taxed (foreign income) | Not taxed |
| Indian property | Taxed | Taxed | Taxed |
| Foreign property | Taxed | Not taxed | Not taxed |
India capital gains rates (brief)
- STCG on listed shares/equity funds (held < 1 year): 20% (from FY 2024-25; was 15%)
- LTCG on listed shares/equity funds (held ≥ 1 year, above ₹1.25 lakh): 12.5% (from FY 2024-25)
- STCG on other assets: taxed at slab rates
- LTCG on other assets: 20% with indexation (property, unlisted shares)
Sources
- Income Tax Act, 1961, §6 (residence), §5 (scope of total income)
- CBDT: incometax.gov.in
- Finance Act 2024 (revised STCG/LTCG rates)
Working paper only. The 120-day rule for high-income Indian citizens abroad is a relatively new provision and requires careful day-count analysis. Have a qualified Indian chartered accountant (CA) review before making residency-dependent decisions.
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Frequently asked questions
Step 2: Ordinary Resident or RNOR?
A resident is Not Ordinarily Resident (NOR/RNOR) if: - Has been a non-resident in India in 9 or more of the previous 10 years, OR - Has been in India for a total of 729 days or less in the previous 7 years
More India tax skills
Other India computations in the OpenAccountants library.