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Case study · USA → India

Sequencing a US return to preserve the RNOR window

Re-timed the move by 11 weeks to maximise the RNOR window. Outcome: two clean years of zero India tax on US-source investment income.
RNOR window preserved
2 yrs
Pre-empted India tax
USD 38k
Filings re-engineered
ITR-2 + Sch FA
The situation

Where the client started.

Senior tech professional returning mid-year with USD 1.2M in US brokerage and a 401(k).

Problem

What was at stake.

  • Client wanted to return in May; that triggered residency same FY and would have collapsed RNOR to a single year.
  • 401(k) and brokerage interest/dividends were about to become India-taxable on a worldwide basis.
  • No plan for Form 67 / DTAA layering with the residual US filing.
Approach

How we worked it.

  1. Re-modelled the 182-day and 60+365 day tests across two FYs.
  2. Shifted physical move to early August, preserving NRI status in the year of move and triggering RNOR for FY+1 and FY+2.
  3. Pre-filed Schedule FA structure with the 401(k), HSA and brokerage broken out asset-by-asset.
  4. Set up Form 67 process for foreign tax credit on US dividends post-RNOR.
Outcome

What changed.

  • Two clean RNOR years: US investment income not taxed in India.
  • USD 38k in pre-empted India tax, computed against the May-return baseline.
  • Clean Schedule FA on first resident return — no notices.
Takeaway

The principle behind it.

When you land matters more than where you land. The RNOR window is the single biggest lever for a US returnee — and it's set by your travel diary, not your CA.

The rules behind it

The rules this case turned on

Two tests decided the outcome. Basic residency under Section 6(1): 182 days in the financial year, or 60 days in the year plus 365 days over the four preceding years. For someone moving back for good, the 60-day limb is the trap — a mid-year arrival can make the year of return a resident year if earlier visits already exceed 365 days. Once resident, Section 6(6) decides RNOR: non-resident in nine of the ten preceding years, or 729 days or fewer in India over the seven preceding years.

Why the US side still mattered

RNOR shelters foreign income only from Indian tax. The US continues to tax its citizens and green-card holders on worldwide income, and non-resident aliens on US-source income such as wages for US workdays. US dividends paid to an Indian resident carry US withholding, and once Indian tax applies, credit for that withholding is claimed through Form 67. Planning both returns together is what avoids double tax in the changeover year.

What generalises to other returns

Model arrival dates against both financial years, not only the year you land. Count every visit day from passport stamps. Decide what to sell before RNOR ends, and set up the foreign-asset register and Form 67 process before the first ordinarily resident year rather than after it.

Related reading

Where this case sits in the wider blueprint.

USA corridor hub→Return to India hub→RNOR planning→Return Planning service→
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