RNOR (Resident but Not Ordinarily Resident)

RNOR is a transitional status in Indian income tax law. A person who returns to India after years abroad can qualify as resident but not ordinarily resident, typically for two or three tax years, if they were a nonresident of India in nine of the ten preceding years or spent 729 days or fewer in India over the preceding seven years. During RNOR years, income earned outside India (U.S. salary, interest on U.S. accounts, gains on U.S. shares) is generally not taxed in India unless it is received in India or derived from a business controlled from India. Status is determined by your Indian Chartered Accountant under Indian law, which was recodified in the Income-tax Act 2025 effective April 2026.

The U.S. side is where Rubric Financial works. The year you leave is usually a dual-status year, and the date U.S. residency ends decides how much post-move income lands on the U.S. return; moving near a year end often changes the result. A 401(k) or IRA remains U.S.-taxable, with 30% withholding and Form 1040-NR filings once you are a nonresident, moderated by the pension article of the India-U.S. treaty. Someone who held a green card for 8 of the last 15 years must also file Form 8854 and may be a covered expatriate subject to the exit tax. There is no U.S.–India totalization agreement, so Social Security tax paid in the U.S. earns no credit toward Indian EPF, and U.S. benefits generally require 40 credits before anything is payable.

Whether an RNOR individual is a resident of India for treaty purposes is contested; the U.S. view reported in late 2025 is that RNOR status alone may not establish treaty residence, so treaty-based positions in an RNOR year should be documented carefully and agreed between both advisers.