Returning Indian & Recent Immigrant Tax Services | Savlana Init

Transition Planning · Moving to India

Returning Indian & Recent Immigrant — The Transition Year.

Whether you are coming home after two decades abroad or arriving in India for the first time, the year you move decides your tax position for the next three. Plan it before you fly.

Moving to India is a tax event long before it is a tax problem. The moment your residential status changes, the scope of what India taxes expands from Indian income to — potentially — your worldwide income, and with it comes an obligation to disclose foreign bank accounts, foreign securities, foreign immovable property and beneficial interests in foreign entities. The difference between arriving in March and arriving in April can be an entire financial year of global taxability, and it is a difference that costs nothing to plan and a great deal to ignore.

The provision that softens the landing is Section 6(6). A returning individual who was a non-resident in nine of the ten preceding financial years, or who was present in India for 729 days or less across the seven preceding years, is treated as resident but not ordinarily resident. In that condition, foreign income is generally outside the Indian net except where it is derived from a business controlled in or a profession set up in India, and Schedule FA disclosure does not apply. For most long-term expatriates the window lasts two financial years, sometimes three, and it is the right time to realise foreign gains, restructure holdings and close out foreign positions.

Alongside tax sits exchange control, which moves on a different clock. Under FEMA, a person returning to India for employment or for an uncertain period generally becomes a person resident in India from the date of arrival, which triggers redesignation of NRE and NRO accounts, the opening of a Resident Foreign Currency account for repatriated foreign earnings, and changes to how foreign assets may be held. Foreign assets acquired while non-resident may generally be retained, but the reporting and remittance rules change immediately. We handle the entire transition — status forecasting, RNOR planning, account conversion, disclosure and the first Indian return.

Our Transition Planning Services

Arrival Date Planning

Modelling of your residential status against alternative arrival dates so the move happens on the date that produces the best position, not by accident.

RNOR Window Determination

Computation of the Section 6(6) tests to establish exactly how many financial years of not-ordinarily-resident status you have, and when it ends.

Pre-Arrival Restructuring

Realisation of foreign gains, closure or repositioning of foreign holdings and timing of income receipt while the concessional window is still open.

Account Redesignation

Conversion of NRE and NRO accounts on becoming resident, opening of Resident Foreign Currency accounts, and instructions to banks, brokers and registrars.

Foreign Asset Disclosure

Preparation of Schedule FA and related disclosure once ordinary residence begins, including foreign accounts, securities, property and beneficial interests.

Foreign Income and Credit

Treatment of foreign salary, pension, rental income, dividends and equity awards after the move, with foreign tax credit claimed through Form 67.

Treaty and Split-Year Relief

Application of the treaty tie-breaker and any split-year provisions in the other country, so the same income is not fully taxed in two places.

First Indian Return

Preparation and filing of the return for the transition year, which is the most complex one, with the status position documented for future scrutiny.

Our Process

Status Forecast

Before you move, we model your Section 6 position for the year of arrival and the following years, and identify the RNOR window that will be available.

Pre-Move Action List

Actions that must be completed before arrival — gain realisation, account changes, income timing, entity restructuring — are listed with deadlines.

Arrival and Redesignation

On arrival, accounts are redesignated, an RFC account is opened where relevant, and banks, brokers and employers are notified of the status change.

Ongoing Compliance

Advance tax, foreign tax credit, foreign asset disclosure where applicable and the annual return are managed for each year of the transition.

End of RNOR Review

Before ordinary residence begins, we review remaining foreign holdings and complete any restructuring that must happen while the window is open.

Why It Matters

✓Move date chosen deliberately, not left to flight availability

✓The full RNOR window identified and used rather than wasted

✓Foreign gains realised while they are still outside the Indian net

✓Accounts redesignated correctly under FEMA on the right date

✓Resident Foreign Currency account used to preserve foreign earnings

✓Schedule FA disclosure started exactly when it becomes due, not before

✓Foreign tax credit claimed properly through Form 67

✓The transition-year return documented to withstand later scrutiny

Frequently Asked Questions

Resident but not ordinarily resident is an intermediate category under Section 6(6). Such an individual is taxed on Indian income and on foreign income only where it is derived from a business controlled in or a profession set up in India. Foreign salary, foreign interest, foreign dividends and foreign capital gains generally stay outside the Indian net, and Schedule FA disclosure of foreign assets does not apply. It is the most valuable period of a return to India.

You qualify if you were a non-resident in nine of the ten preceding financial years, or were in India for 729 days or less across the seven preceding years. For a person who has been abroad continuously for many years, this normally produces two financial years of RNOR status after return, and sometimes three depending on the month of arrival and the earlier travel pattern.

Substantially. The Indian financial year runs from April to March, and residence is determined on days present within that year. Arriving after the beginning of October generally leaves fewer than 182 days in the year, which usually preserves non-resident status for that year and pushes the whole transition forward by twelve months. It is the single cheapest planning step available.

Under FEMA you become a person resident in India on returning for employment or for an uncertain period, and the accounts must be redesignated. NRE balances are typically transferred to a Resident Foreign Currency account, which allows foreign currency to be retained and remains freely repatriable. NRO accounts are redesignated as ordinary resident accounts. Banks require written intimation, and delay creates a regulatory breach rather than merely an administrative one.

Generally yes. Foreign currency, foreign securities and foreign immovable property acquired, held or owned while you were resident outside India may be retained after return, along with income and sale proceeds arising from them. What changes is Indian taxability once ordinary residence begins, and the obligation to disclose those assets in Schedule FA of the return.

Not if the position is managed. While you are RNOR most foreign income is outside the Indian net entirely. Once ordinarily resident, worldwide income is taxable in India but foreign tax paid on that income can be claimed as a credit under the applicable treaty, subject to filing Form 67 with the supporting evidence within the prescribed time. Missing Form 67 is the most common reason credit is denied.

Planning a move to India this year or next?

Tell us when you intend to arrive and what you hold abroad. We will model the status outcome, map your RNOR window and give you the action list to complete before you fly.