Returning to India

    RNOR Status and Your UK Pension

    The most valuable tax window a returning NRI has — and the one most often spent doing nothing.

    When a long-term NRI returns to India, they do not usually become fully taxable in India straight away. For a transitional period, foreign income is generally outside the Indian tax charge.

    This page explains how the status is calculated, what it gives you, and the UK pension decisions that are cheaper inside the window than outside it.

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    The short answer

    For a transitional period — commonly two to three financial years — a returning NRI is Resident but Not Ordinarily Resident, and foreign income is generally outside the Indian tax charge.

    It is a window, not a status you keep. What you do inside it — with UK pensions, overseas investments and UK property — is usually worth more than anything you can do afterwards.

    The Test

    How RNOR Is Determined

    There are two stages. First, you have to be resident in India for the financial year under the day-count tests. Then, being resident, you are treated as not ordinarily resident if either of the following applies:

    • You were non-resident in India in nine out of the ten preceding financial years; or
    • You were in India for 729 days or less in total across the seven preceding financial years.

    Because both tests look backwards at day counts, the length of the window is effectively set by your travel history — and the date you return can shift it by a full financial year. Someone returning in March rather than April may find they have given up a year of RNOR without realising it.

    Separate deemed-residency provisions can apply to individuals with Indian-sourced income above a threshold who are not liable to tax in any other country. These were introduced to catch genuinely stateless tax positions, but they occasionally affect returning clients with substantial Indian income, so the position should be confirmed rather than assumed.

    The Benefit

    What RNOR Actually Gives You

    • Foreign income generally outside the Indian charge — including, in most cases, overseas pension income, interest and dividends.
    • Indian income remains taxable as normal.
    • The main exception: income from a business controlled in, or a profession set up in, India remains taxable even if it arises abroad.
    • A different reporting posture — the extensive foreign asset disclosure obligations that apply to ordinarily resident individuals generally bite once the window closes.

    Once the window closes, you are taxable in India on worldwide income and gains, and the foreign asset reporting regime applies. Nothing about that is unmanageable, but it is a materially different position from the one you spent your first two or three years in.

    UK Pensions

    What It Means for a UK Pension

    This is where returning clients most often lose money by waiting. Decisions about UK pensions have a different cost inside and outside the RNOR window, and the UK side does not pause while you decide.

    • Lump sums and their timing — whether to take a UK pension lump sum, and in which tax year, changes depending on your Indian status at the time.
    • Income withdrawals — how UK pension income is taxed between the two countries is governed by the UK-India Double Taxation Agreement, and which country taxes first affects how relief is claimed.
    • Whether to transfer at all — the UK Overseas Transfer Charge turns on your tax residency matching the receiving scheme's country, a separate test from RNOR. Both need to be right, at the same time.
    • Realising foreign gains — investments and property held abroad may be better dealt with while foreign income and gains remain outside the Indian charge.
    • UK State Pension — entitlement, voluntary contributions and how the payments are treated once you are in India.

    If a transfer is part of your plan, read whether a QROPS transfer to India is tax-free and when the 25% charge applies. If you own UK property, the RNOR window is also usually the cheapest time to deal with it — see the 60-day UK reporting deadline for non-resident sellers.

    Checklist

    A Checklist for the Window

    1. 1Confirm the exact financial years in which you qualify as RNOR, from your day counts.
    2. 2Establish your UK residency position for the same years under the UK Statutory Residence Test.
    3. 3List every foreign asset, pension and income source in one place.
    4. 4Decide what should be realised, restructured or left alone before the window closes.
    5. 5Convert NRE and NRO accounts to resident status as required, and plan currency timing.
    6. 6Set the UK pension strategy — keep, draw or transfer — with both tax systems in view.
    7. 7Prepare for the reporting obligations that begin when ordinary residence starts.

    Official sources

    Related Reading

    Where to Go Next

    This page is general information about how UK and Indian rules operate. It is not a personal recommendation. Residential status is fact-specific and should be confirmed for your own day counts before any decision is taken.

    FAQs

    Frequently Asked Questions

    What is RNOR status?

    Resident but Not Ordinarily Resident is a transitional Indian tax status. You are resident in India, but your foreign income is generally not taxable there — with the main exception of income from a business controlled in, or a profession set up in, India. It typically applies for the first two to three financial years after a long-term NRI returns.

    How long does RNOR last?

    It depends on your history of days spent outside India, not on a fixed grant. For someone who has been non-resident for many years, it commonly runs for two to three financial years after return, and then ordinary resident status begins. Because it is calculated from day counts, the exact end date can often be influenced by when in the year you return.

    How is RNOR determined?

    You first have to be resident in India for the year under the day-count tests. You are then treated as not ordinarily resident if you were non-resident in India in nine out of the ten preceding financial years, or if you were in India for 729 days or less across the seven preceding years. Additional deemed-residency provisions can apply to certain individuals with Indian-sourced income above a threshold who are not liable to tax elsewhere.

    Is my UK pension taxable in India while I am RNOR?

    Foreign income is generally outside the Indian charge while you are RNOR, which can include UK pension income. That does not remove the UK side: UK pension payments may still be taxable in the UK, with the UK-India Double Taxation Agreement determining which country has taxing rights and where relief is claimed. The combination has to be looked at together, not one country at a time.

    What should I actually do during the RNOR window?

    This is the period to make decisions that would be more expensive later: realising foreign gains, restructuring overseas holdings, deciding whether to take UK pension lump sums, and dealing with UK property. Once ordinary resident status begins, worldwide income and gains come into the Indian charge and foreign asset disclosure obligations apply.

    Does RNOR affect a QROPS transfer?

    It can. The UK Overseas Transfer Charge turns on tax residency matching the country of the receiving scheme, which is a separate test from RNOR. But your Indian status determines how the resulting income is taxed in India, so the two need to be planned together rather than in sequence.

    Planning a Return to India?

    The RNOR window is easiest to use when it is planned before you move. Book a free discovery call and we will map the years you have.

    Book a Free Discovery CallUK Pension Advice for Returning NRIs