Rnor status and benefits
This query is : Resolved
01 May 2016
I am NRI since 22 years in UAE and returning to India in Jun2016. Kindly clarify.
1. What is latest ruling on applicability of RNOR status. (2016 proposed budget). How log I can maintain RNOR status.
2. Is Foreign Income (Salary , Gratuity etc) is tax free during RNOR status? (I will receive three months salary + Gratuity in FY 2016-17. )
3. For how long Interest income on NRE Fd & FCNR tax free.?.
(Kindly provide reference of section no of I.Tax rules)
Thanks
Som Shrivastava
1. What is latest ruling on applicability of RNOR status. (2016 proposed budget). How log I can maintain RNOR status.
2. Is Foreign Income (Salary , Gratuity etc) is tax free during RNOR status? (I will receive three months salary + Gratuity in FY 2016-17. )
3. For how long Interest income on NRE Fd & FCNR tax free.?.
(Kindly provide reference of section no of I.Tax rules)
Thanks
Som Shrivastava
22 July 2025
Hi Som! Here’s a clear and updated answer about RNOR status and related tax benefits for NRIs returning to India, based on the rules around 2016 and beyond:
1. What is RNOR status & how long can you maintain it?
RNOR = Resident but Not Ordinarily Resident.
Under the Income Tax Act, you become a resident in India if you stay in India for ≥182 days in a financial year.
You are classified as RNOR if:
You are a resident in the current year, and
You have been a non-resident in India in 9 out of 10 preceding years, or
You have been in India for less than 729 days in the last 7 years preceding the current year.
You can maintain RNOR status for up to 2 consecutive years after becoming resident.
2. Is Foreign Income (Salary, Gratuity etc.) tax-free during RNOR?
During RNOR status, foreign income earned or accrued outside India is not taxable in India.
So, your foreign salary and gratuity received for work done abroad would not be taxable in India during RNOR status.
However, income earned or received in India will be taxable as usual.
3. How long is interest income on NRE FDs & FCNR accounts tax-free?
Interest earned on NRE (Non-Resident External) accounts and FCNR (Foreign Currency Non-Resident) accounts is tax-free in India for as long as you maintain your NRI status.
Once you become a resident or RNOR, the tax exemption on interest income ceases.
So, if you become RNOR or resident, interest income from these accounts will become taxable unless specific exemptions apply.
1. What is RNOR status & how long can you maintain it?
RNOR = Resident but Not Ordinarily Resident.
Under the Income Tax Act, you become a resident in India if you stay in India for ≥182 days in a financial year.
You are classified as RNOR if:
You are a resident in the current year, and
You have been a non-resident in India in 9 out of 10 preceding years, or
You have been in India for less than 729 days in the last 7 years preceding the current year.
You can maintain RNOR status for up to 2 consecutive years after becoming resident.
2. Is Foreign Income (Salary, Gratuity etc.) tax-free during RNOR?
During RNOR status, foreign income earned or accrued outside India is not taxable in India.
So, your foreign salary and gratuity received for work done abroad would not be taxable in India during RNOR status.
However, income earned or received in India will be taxable as usual.
3. How long is interest income on NRE FDs & FCNR accounts tax-free?
Interest earned on NRE (Non-Resident External) accounts and FCNR (Foreign Currency Non-Resident) accounts is tax-free in India for as long as you maintain your NRI status.
Once you become a resident or RNOR, the tax exemption on interest income ceases.
So, if you become RNOR or resident, interest income from these accounts will become taxable unless specific exemptions apply.
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