When I moved back to Kochi after 10 years in California, one tax term changed my entire financial picture: RNOR.
This magical tax status—Resident but Not Ordinarily Resident—saved me lakhs in taxes during my transition period. But I nearly missed qualifying for it due to confusion about the eligibility criteria.
Decoding RNOR
After helping dozens of returning NRIs navigate this same confusion, I’ve created this straightforward checklist to help you determine if you qualify for this valuable tax status.
Why RNOR Status Matters: The Bottom Line Benefits 💰
Before diving into qualification criteria, let’s understand why RNOR status is worth pursuing:
During RNOR status:
- Your foreign income remains completely tax free in India
- Only your Indian income is taxable in India
- Your global wealth remains outside Indian tax jurisdiction
- You gain crucial time to reorganize your financial affairs
For me, this meant my US rental income, dividends, and capital gains remained untaxed in India for nearly three years after my return to Kochi. This protection saved me approximately ₹12 lakhs annually in potential tax liability.
The Two Qualification Routes: Which Path Works for You? 🔍
The Income Tax Act provides two distinct paths to qualify for RNOR status. You only need to satisfy either one:
Route 1: The 9 out of 10 Years Test
You qualify as RNOR if:
- You were a Non Resident Indian (NRI) in 9 out of the 10 tax years immediately preceding the relevant tax year
In simple terms: If you lived abroad for at least 9 out of the past 10 years, you’ll qualify for RNOR status.
This route typically works best for long term NRIs returning after extended periods abroad.
Route 2: The 729 Days Test
You qualify as RNOR if:
- You were physically present in India for 729 days or less during the 7 tax years immediately preceding the relevant tax year
In simple terms: If your total time in India over the past 7 years is less than 2 years (729 days), you qualify for RNOR status.
This route often works well for NRIs who made occasional visits to India but maintained their primary residence abroad.
Personal Application: Having lived continuously in California for 10 years before my return, I easily qualified under both routes. My total visits to India during that period amounted to less than 200 days over the previous 7 years, well below the 729-day threshold.
The Simple Self Assessment Checklist ✅
Use this straightforward checklist to determine your likely qualification:
For Route 1 (9 out of 10 Years Test):
- [ ] I maintained NRI status for tax purposes for at least 9 out of the 10 years before the current tax year
- [ ] I have documentation proving my foreign tax residency during those years
- [ ] My passport shows limited stays in India during this period
- [ ] I filed Indian tax returns as a non resident (if applicable) during those years
Quick Check: If you’ve been continuously living outside India for 9+ years, you almost certainly qualify through this route.
For Route 2 (729 Days Test):
- [ ] I spent less than 729 total days in India during the 7 tax years preceding the current tax year
- [ ] I have passport stamps or travel records documenting my limited presence in India
- [ ] I can prove my physical presence outside India for most of this period
- [ ] My visits to India were temporary and not for residential purposes
Quick Check: If you’ve primarily lived abroad and visited India only occasionally (averaging less than 104 days per year) over the past 7 years, you likely qualify through this route.
Common Qualification Scenarios 📊
Scenario 1: Long Term Continuous NRI
Profile: Ram worked in Silicon Valley for 12 consecutive years, visiting India only for 2-3 weeks annually.
Qualification Assessment:
- Easily qualifies under Route 1 (NRI for more than 9 out of 10 years)
- Also qualifies under Route 2 (approximately 420 days in India over 7 years)
- Clear documentation through passport stamps and US tax returns
RNOR Duration: Eligible for RNOR status for approximately 2-3 years after return.
Scenario 2: Recently Relocated NRI
Profile: Priya lived abroad for only 6 years, with infrequent visits to India totaling about 100 days.
Qualification Assessment:
- Does not qualify under Route 1 (only 6 years as NRI instead of required 9)
- Qualifies under Route 2 (well below 729 days in India over 7 years)
- Can establish eligibility through passport stamps and foreign residency proof
RNOR Duration: Eligible for RNOR status for approximately 1-2 years after return.
Scenario 3: Frequent India Visitor
Profile: Vikram lived in Dubai for 11 years but visited India frequently, spending about 60 days each year with family.
Qualification Assessment:
- Qualifies under Route 1 (NRI for more than 9 out of 10 years)
- May not qualify under Route 2 (approximately 420 days in India over 7 years, but still below 729 threshold)
- Documentation through passport stamps and UAE residency documentation
RNOR Duration: Eligible for RNOR status for approximately 2 years after return.
RNOR Duration: How Long Does It Last? ⏱️
A common misconception is that RNOR status automatically lasts for two years. The reality is more nuanced:
- RNOR status is determined separately for each tax year
- Your status can change once you no longer meet either qualification route
- Typically lasts 2-3 years for most returning NRIs
- The exact duration depends on your specific travel history
Timeline Insight: When I returned to Kochi in December 2022, my RNOR status covered the remainder of the 2022-23 tax year, plus the complete 2023-24 and 2024-25 tax years. This timing maximized my transition benefits.
The Power of Strategic Return Timing 🗓️
The date you choose to permanently return to India can significantly impact your RNOR benefit period:
| Return Timing | Impact on First Year’s Status | RNOR Benefit Duration | Strategic Value |
|---|---|---|---|
| Jan-Mar (Q4 of FY) | Likely still NRI | Maximum (potentially 3 full years) | Highest value |
| Apr-Sep (Q1-Q2 of FY) | Likely Resident | Standard (typically 2 years) | Good value |
| Oct-Dec (Q3 of FY) | Possibly RNOR | Extended (potentially 2.5 years) | Very good value |
My Strategy: I specifically timed my return from California to Kochi for late December rather than the following April as originally planned. This timing strategy gained me an additional full year of RNOR status worth approximately ₹14 lakhs in tax savings.
Documentation Needed to Prove RNOR Status 📝
Maintaining proper documentation is essential for supporting your RNOR status:
Essential Documentation Package:
- Passport with entry/exit stamps showing previous travel history
- Previous years’ tax returns from your country of residence
- Foreign residency or work permits
- Employment verification from foreign employers
- Bank statements showing foreign residency
- A day count spreadsheet tracking your presence in India
Documentation Success: When my RNOR status was questioned during a routine tax assessment, my detailed documentation—including passport copies, day count calculations, and US tax returns for the past decade—quickly resolved any doubts about my eligibility.
Common Qualification Mistakes to Avoid ⚠️
Mistake 1: Incorrect Day Counting
The Error: Many NRIs count only complete days in India, missing the fact that both arrival and departure days count as full days of presence.
The Fix: Count every day you were physically present in India at any point during the day, including both arrival and departure dates.
Mistake 2: Forgetting Previous Brief Returns
The Error: Overlooking short periods when you previously returned to India that might affect your NRI status continuity.
The Fix: Create a comprehensive timeline of all periods spent in India, even short stays that you might consider insignificant.
Mistake 3: Assuming Automatic Two-Year Duration
The Error: Believing RNOR status automatically applies for two years without yearly reassessment.
The Fix: Understand that RNOR qualification is evaluated separately for each tax year based on the rolling lookback period.
RNOR Qualification Case Study: My Personal Journey 🧳
When I planned my return to Kochi after a decade in California, I carefully assessed my eligibility:
Step 1: I reviewed my passport stamps for the previous 10 years, confirming I had maintained NRI status continuously during this period.
Step 2: I calculated my total days in India during the previous 7 years, which amounted to approximately 190 days across multiple short visits, well below the 729-day threshold.
Step 3: I gathered supporting documentation including all my US tax returns, employment history, and California residency proof.
Step 4: I strategically timed my permanent return for late December rather than April, maximizing my RNOR benefit period.
Step 5: I consulted with tax professionals in both the US and India to confirm my understanding of my RNOR eligibility and duration.
These careful steps ensured I confidently qualified for and maximized my RNOR status benefits throughout my transition period.
Next Steps After Confirming Your Qualification ✅
Once you’ve determined you qualify for RNOR status, take these important next steps:
- Consult with a tax professional familiar with NRI taxation to confirm your assessment
- Create a comprehensive documentation file supporting your RNOR eligibility
- Consider strategic timing of your permanent return to maximize RNOR benefits
- Develop a plan for managing foreign income during your RNOR period
- Begin preparing for eventual transition to full resident status
Understanding your RNOR qualification is just the beginning. The real value comes from strategically using this transition period to reorganize your global finances in a tax efficient manner.
Did this checklist help clarify your RNOR eligibility? Would you like specific guidance on how to maximize the benefits of your RNOR status based on your particular situation?