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Returning to India from the US on an H-1B? Here Is Your Tax Playbook.
For H-1B holders moving back, the end of US tax residency is reviewed separately from visa status. It turns on the departure date, substantial-presence history and the India-US DTAA. Indian residency follows the Section 6 tests (182 days, or 60 days plus 365 days in the previous four years). Where RNOR applies, foreign-source income can stay outside Indian tax for a limited period. Salary, RSUs and 401(k) items are reviewed one by one. India-US DTAA credit prevents true double tax.
Last reviewed: June 2026 · Updated for AY 2026-27
H-1B holders: Indian tax residency and the RNOR window.
- 01
While on H-1B in the US
You are an NRI for Indian tax if you are in India for fewer than 182 days in the financial year (with the tighter 120-day test where Indian-source income exceeds Rs 15 lakh). India taxes only Indian-source income — rent, NRO interest, Indian capital gains.
- 02
The year you move back
You become resident once your India days cross the Section 6 thresholds, so the landing date can shift a whole tax year. In the move year you may also remain a US tax resident under the substantial-presence test; the India-US DTAA tie-breaker and foreign tax credit prevent true double tax.
- 03
RNOR after you land
Many returning H-1B holders qualify as RNOR, depending on their residence history. During RNOR, foreign-source income is generally outside Indian tax. Salary for days worked in India, RSU vesting, share sales and 401(k) withdrawals each need their own sourcing review.
- 04
After RNOR ends
Global income becomes taxable in India with DTAA credit for US tax. Section 89A (Form 10EE) may, subject to Rule 21AAA conditions, defer Indian tax on the 401(k) until withdrawal, and Schedule FA disclosure applies once you are Resident and Ordinarily Resident. FBAR is a separate US obligation that applies only if you remain a US person holding qualifying accounts outside the US above the threshold.
Check your window with the RNOR calculator or read RNOR status explained.
What H1B Returning NRIs ask first.
The same four pillars (tax, FEMA, property, return) apply everywhere — but the order changes by corridor. Here's where H1B Returning cases usually start.
- 01RNOR + DTAA combined strategy
- 02Dual-residency year returns
- 03401(k)/IRA and India tax (Section 89A, Form 10EE)
- 04RSU vesting and sale timing around RNOR
- 05H1B return decision matrix 2026
How we help H1B Returning NRIs.
Book a focused advisory call tailored to your corridor.
- 01H1B return decision call
- 02401(k) / RSU RNOR sequencing review
- 03Section 89A / Form 10EE filing
Deep reads for H1B Returning NRIs.
Step-by-step explainers for the H1B Returning corridor.
Returning to India from H1B Returning.
What makes a permanent return from H1B Returning different, from more than 250 NRI Come Back Plans prepared by Regi Tom Antony & Associates in the last ten years. Regi returned to India himself after around 20 years abroad.
- 01401(k), HSA and unvested RSUs: each needs its own decision on when to withdraw, sell or hold, timed against your RNOR years.
- 02Your last US year is often a dual-status return; India-US DTAA credit is claimed on the Indian side.
- 03India and the US have no social security totalisation agreement, so US Social Security credits need a plan of their own.
Keep exploring.
Step-by-step ITR filing: forms, residential status, Schedule FA and refunds.
The day-count tests that decide whether you are NRI, RNOR or resident.
RNOR sequencing and a personal move-back roadmap.
Browse every NRI tax, FEMA and return guide.
Got a question specific to H1B Returning?
Mention the country and life stage — we'll send back a corridor-specific reply.
US tax in the year you leave
In the year of departure most H-1B holders are dual-status: US resident for the part of the year before leaving and non-resident afterwards, provided they can show a closer connection to India. The final US return reports worldwide income for the resident period only. Departing non-citizens are also expected to obtain a certificate of tax compliance — the sailing permit — before leaving.
RSUs and ESPP across the move
RSUs are taxed by the US as wages at vesting, sourced by where you worked during the vesting period. If a vest lands after you become Indian resident, India can also tax the part attributable to Indian workdays, and treaty credit is needed to avoid paying twice. Vested shares and ESPP stock you keep become foreign assets; once you are ordinarily resident, gains on sale are taxable in India.
401(k), IRA and Social Security
A 401(k) can stay in place after you return. Withdrawals before age 59½ generally carry a 10% US additional tax on top of income tax. India taxes withdrawals once you are ordinarily resident; Section 89A, claimed through Form 10EE, can align Indian tax with the year of withdrawal for US retirement accounts. The US and India have no social security totalization agreement, so US Social Security contributions do not transfer.
Answered, candidly.
- Does leaving the US on H1B automatically make me Indian resident?
- No. Indian residency follows day-count tests. The landing date can shift an entire tax year, so we model it before tickets are booked.
- Does my H-1B visa decide my Indian tax residency?
- No. Indian tax residency follows Section 6: 182 days in India in the financial year, or 60 days plus 365 days over the preceding four years. The 60-day limb is extended for qualifying citizens leaving for employment and citizen/PIO visitors; the 120-day visitor rule requires income other than foreign-source income above Rs 15 lakh and the 365-day condition. Visa status does not decide Indian residency.
- Will I get RNOR status after returning from H-1B?
- Often, depending on your history. If you were non-resident in nine of the previous ten years, or in India for 729 days or less in the previous seven, you are RNOR — typically for two to three years — and foreign-source income generally stays outside Indian tax.
- Should I exercise my RSUs before or after the move?
- It depends on vesting cliff dates, US withholding and your RNOR window. the US-source portion of an RNOR-year vest may fall outside Indian tax, but the vest, the later sale and any India workdays are reviewed separately. We model it line-by-line.
- Can I keep my 401(k) after returning to India?
- Yes. Section 89A (Form 10EE) can align Indian tax on a notified foreign retirement account such as a 401(k) with withdrawal. Rule 21AAA attaches conditions on timing, continuation and what happens if you later become non-resident. The election is irrevocable and needs a review of your facts before filing.
The frameworks on this page are drawn from NRI Tax Blueprint 2025 — written by Regi Tom Antony, FCA, the practicing CA who advises on the same problems every week.
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Regi Tom Antony, FCA — a practicing Chartered Accountant who advises NRIs, OCIs and returning founders on the same questions every week. Every page here is drawn from the book and live engagements, not stock copy.
Reviewed by Regi Tom Antony, FCA, who returned to India himself after around 20 years abroad and leads the NRI Come Back Plan at Regi Tom Antony & Associates: 250+ Come Back Plans in the last 10 years, covering RNOR timing, foreign pensions, Schedule FA, estate tax, FEMA, wills and family transition coaching.
- RTA & Associates· Chartered Accountants
- NRI Tax Blueprint· Authored playbooks
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