Returning to Telangana as an NRI: Residency, RNOR and What to Plan

Telangana has a large diaspora, especially in the US, and many NRIs return to Hyderabad after years abroad. Returning changes your tax position in India significantly, and there's a window to plan the transition. This guide covers what to think about.

When You Become Resident

Residency is decided each financial year, mainly on days spent in India. If you return mid-year and spend 182 days or more in India, you're resident for that year. Returning earlier or later in the year can change which year you first become resident.

The RNOR Window

Most returning NRIs qualify as 'resident but not ordinarily resident' for their first few years back, depending on how long they were abroad. During RNOR years:

• Foreign income — like interest, dividends and rent abroad — is generally not taxed in India.
• Foreign assets generally don't need to be reported in Schedule FA.
• Indian income is taxed as usual.

Once you become ordinarily resident, your worldwide income is taxed in India, and foreign assets must be reported.

What to Plan During RNOR

1. Decide what to do with foreign bank and brokerage accounts.
2. Consider the tax treatment of foreign retirement accounts once you're ordinarily resident.
3. Plan any sale of foreign property or investments.
4. Understand how your foreign pension or rental income will be taxed later.

FEMA and Banking

Returning also changes your status under FEMA. NRE and NRO accounts need to be redesignated as resident accounts, or funds moved to RFC accounts where eligible, within the required time. Investments made as an NRI may need updating.

Local Points in Telangana

• Property you own in Hyderabad: rental income continues to be taxed in India, and any NRI TDS arrangements with tenants should be updated.
• Local bank accounts at Telangana branches need your status updated.
• Professional Tax applies once you take up employment or practice in Telangana.

A Checklist for Returning NRIs

1. Work out your residency for the year of return.
2. Confirm RNOR eligibility and how long it lasts.
3. Redesignate NRE/NRO accounts.
4. Plan foreign assets before becoming ordinarily resident.
5. Update tenants and banks about your status.

Getting Help

Think Filing helps NRIs returning to Telangana plan their residency, foreign assets and banking.