What is the eligibility for becoming an RNOR?
-Name withheld on request
Assuming that you will reside in India for work for more than 182 days in the current fiscal year (i.e. April 2025 to March 2026), you will become a resident under the Indian tax laws. Further, if you have been a non-resident in India in nine out of the 10 preceding fiscal years or have been in India for 729 days or less during the seven preceding fiscal years, then you will qualify for specific category of resident but not ordinarily resident (RNOR) within the concept of residence. Assuming you haven't stayed in India anytime before, you will be able to satisfy both these conditions in your case, and accordingly you will become RNOR for the 2025-26.
As an RNOR, all incomes earned outside India are not taxable in the country except those derived from any business controlled in India or any profession set up in India. In your case, you will be earning the salary income from the Indian company as well as from the UAE parent company for the services you will render in India on account of your employment with the Indian company.
Since you will be exercising your employment in India, the salary income will be considered to have accrued or arisen in India and will not be treated as income earned outside India. Therefore, the salary income received from the parent company will also be taxable in India, and you will have to offer it to tax in India in your income tax return corresponding to 2025-26. The Indian subsidiary would also be under an obligation to deduct tax at source (TDS) on the foreign portion of the salary that you will receive in the UAE.
You will retain your RNOR status until you complete 730 days of stay in India in any of the seven preceding fiscal years. If you are likely to travel outside India during holidays, you may qualify as RNOR even for the subsequent two fiscal years, i.e. 2026-27 and 2027-28, since your cumulative stay in India would not exceed 729 days until 31 March 2027.
Till the time you remain an RNOR, you are not required to disclose any of your foreign assets (such as overseas bank accounts, overseas financial interests, etc.) in your Indian income tax return under Schedule FA.
Harshal Bhuta is a partner at P. R. Bhuta & Co. Chartered Accountants.
First Published: 28 Apr 2025, 02:05 PM IST
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