Returning to India: RNOR Status, Foreign Assets and Schedule FA

Moving back to India after years abroad brings a valuable tax window, and also a serious reporting duty that many returning NRIs miss. If you plan well, you can bring your money home in a tax-efficient way. If you plan badly, you could face penalties of ₹10 lakh a year.

Stage 1: The RNOR window

When you return, you will usually become resident under the 182-day test in the year you come back, or the next year. But you are first classed as Resident but Not Ordinarily Resident (RNOR) if either:

• you were a non-resident in 9 of the 10 previous tax years, or
• you were in India for 729 days or less over the 7 previous tax years.

The Income Tax Department has confirmed these conditions are unchanged under the Income-tax Act, 2025.

What RNOR status means

For most people who have been abroad a long time, RNOR status lasts about 2–3 years. It is the best time to:

• sell foreign assets (shares, property) that have grown in value
• close or restructure foreign accounts
• bring savings back to India

Stage 2: Becoming ROR, when worldwide income is taxed

Once you become Resident and Ordinarily Resident (ROR):

• your worldwide income is taxable in India (foreign salary, dividends, interest, rent and capital gains)
• you can claim a foreign tax credit for tax paid abroad by filing Form 44 (formerly Form 67) before your ITR
• you must disclose all foreign assets in Schedule FA of your ITR

Schedule FA: the disclosure you must not miss

Only ROR individuals must fill in Schedule FA. NRIs and RNORs do not. It covers:

• foreign bank accounts (including dormant ones)
• foreign shares, ESOPs/RSUs and mutual funds
• foreign retirement accounts (for example 401(k), IRA, pension funds)
• property abroad
• foreign insurance policies with a cash value
• accounts you can sign on, even if you do not own them

Penalty under the Black Money Act: ₹10 lakh for each year you fail to disclose, even if the asset was bought with money already taxed. Since 1 October 2024, this penalty does not apply if the total value of foreign assets other than immovable property is ₹20 lakh or less. Foreign property must always be disclosed.

Reporting period: Schedule FA has traditionally used the calendar year (January to December) for each asset. Always check the period stated in the current ITR form when filing.

What to do with your bank accounts

Under FEMA, the money and investments you held abroad while you were non-resident can generally be kept after you return.

Investments to review

• Mutual funds and demat accounts: update your status from NRI to resident.
• US-based assets: check how US estate tax and US tax filings apply after you leave.
• Foreign retirement accounts: check how withdrawals are taxed, both under the treaty and in India.
• Insurance: update your residency with Indian insurers.

Checklist for the year you return

1. Work out your residential status for the year (resident, and RNOR or ROR).
2. Plan when to sell or move foreign assets so that it falls in the RNOR window.
3. Redesignate your bank accounts and update your KYC everywhere.
4. Keep proof of the foreign assets you held when you returned.
5. From the first ROR year, report Schedule FA and claim foreign tax credit with Form 44.

Frequently asked questions

Is my foreign salary taxable in the year I return?
If you are RNOR, foreign salary for work done abroad and received abroad is generally not taxable in India.

Do I need to report my foreign bank account if I am RNOR?
Schedule FA is compulsory only for ROR individuals. Many advisers still recommend keeping complete records from the year you return.

I forgot to report a foreign account in Schedule FA last year. What can I do?
File a revised return (if the deadline is open) or an updated return, and get professional advice quickly. Voluntary correction is treated much more leniently.

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Moving back to India? Garvita Jain & Co. plans returning-NRI transitions, from RNOR planning and account changes to Schedule FA and foreign tax credit. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice.

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Sources

Official

• Income Tax Department, Non-Resident FAQs (NOR conditions unchanged)

Professional / CA publications

• Taxmann, Schedule FA and implications under the Black Money law
• Lakshmikumaran & Sridharan, Non-disclosure of foreign assets: threshold for penalty
• ClearTax, Disclosure of foreign assets in ITR
• Tax2win, Schedule FA guide
• TaxGuru, Form mapping (67 → 44)