Indian professionals who are moving back from the US often lack clarity about how they can manage their overseas holdings like stocks, ETFs, 401k accounts, and RSUs after moving back.
This article explains how you can manage your overseas holdings after moving back to India, and the Indian tax and reporting requirements you will be subject to. We also cover your tax residency status, how it changes, how you can avoid double taxation, and RNOR rules and opportunities.
Table of contents
- What happens to my stocks when I move back
- Best way to stay invested globally after moving back
- What happens to my 401k
- Should I withdraw my 401k
- Tax and reporting implications of moving back
- RNOR status and how it affects you
What happens to my stocks when I move back to India?
Most US brokerage firms are designed to serve US residents. When you move back to India, you become a "Non-Resident Alien" (NRA) in the eyes of the US tax system, and many brokers do not support NRA accounts.
Here is how different platforms typically handle the move:
- Robinhood, Webull, M1 Finance: These platforms do not support non-US residents. If they detect a foreign IP address or if you update your address to India, they may restrict your account or force you to liquidate your positions immediately.
- Schwab, Fidelity, E*TRADE: These brokers are more flexible and usually allow you to convert your account to an International account. However, you will likely face restrictions: you may lose access to US Mutual Funds, dividend reinvestment plans (DRIP) might be disabled, and you will have to manage complex tax reporting manually. They also have high withdrawal charges and poor FX rates.
What's the best way to stay invested globally after moving back to India?
The best way to stay invested globally after moving back to India is transferring your investments into a platform that is specifically made for global investing from India.
These platforms will allow you to maintain your positions and trade as usual, while providing India specific compliance support like filing form W-8BEN and tax documents tailored for indian reporting requirements.
“Do not need to sell your stocks just because you are moving. Selling triggers a taxable event. Instead, use an ACATS transfer (Automated Customer Account Transfer Service). This allows you to move your entire portfolio "in-kind" (as is) to an India-friendly platform like Paasa.“
What happens to my 401k when I move back to India?
A common misconception is that you must close your 401(k) or sell your investments when you leave the US. This is incorrect.
Your 401(k) is legally yours, regardless of where you live. You can continue to hold it, manage the investments within it, and eventually withdraw from it in retirement, even if you never return to the US.
However, once you leave your job, you generally cannot make new contributions to that specific plan. Your account essentially goes into "maintenance mode"—the funds stay invested and continue to grow tax-deferred.
Should I withdraw my 401k or keep it as-is?
You can either withdraw your 401k (and pay a 10% penalty plus taxes) or keep is as is when moving back to India. Here are the pros and cons of each option:
1. Leave it
If your account balance is over $5,000, most plan administrators allow you to keep the funds in the existing plan indefinitely.
In this case, your money continues to grow, and you can withdraw it without paying the 10% penalty after you turn 59.5 years old.
- Estate Tax Risk: If you pass away while holding more than $60,000 in US assets (including your 401k) as a non-resident, your estate will be subject to an up to 40% US Estate Tax. This is a risk you will have to take if you decide to leave your 401k as-is.
2. Withdraw the Funds
You can choose to liquidate the account.
If you do this before age 59½, you will face a flat 10% early withdrawal penalty on top of the standard US income tax applicable to that amount.
Despite the penalty, this option gives you the freedom to invest the money where you want.
It also allows you to avoid the US Estate Tax. By taking the cash out and reinvesting it in "Non-US Situs" assets , you ensure your heirs are not hit with the 40% tax on that wealth.
Note: There is no single "best" answer here. Leaving the money allows for tax-deferred growth but carries estate tax risks. Withdrawing it incurs an immediate cost but offers freedom and safety from future US taxes. The right strategy depends entirely on your specific financial goals and risk tolerance.
To learn more about the US Estate Tax risk, read our detailed guide on the US Estate Tax,
Tax and reporting implications of moving back to India
When you permanently return to India, your tax status eventually shifts from being a Non-Resident Indian (NRI) to a Resident.
This brings two major changes: your global income becomes taxable in India, and your reporting requirements increase significantly.
To learn more about how your global income is taxed in India and the reporting requirements, read:
- How Global Stocks and ETFs Are Taxed for Indian Investors
- Tax on Repatriation of Foreign Income to India
- Foreign Asset Disclosure (Schedule FA) Requirements for Indians
When do you become a Tax Resident?
Under the Income Tax Act, You are considered a tax resident of India if:
- You are physically present in India for a period of 182 days or more in the tax year (182-day rule), or
- You are physically present in India for a period of 60 days or more during the relevant tax year and 365 days or more in aggregate in four preceding tax years (60-day rule).
Once you meet this criterion, you are legally required to pay tax in India on income earned anywhere in the world, including US interest, dividends, and capital gains.
Note: Depending on your travel history, you might land in a situation where you are considered a tax resident of both the US and India.
This happens because the US has a substantial presence rule where you are considered a tax resident if you were physically present in the U.S. on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
To learn how you can avoid double taxation and determine your residency in such situations. read our detailed guide on India’s Double Taxation Avoidance Agreements.
What is RNOR status and how does it affect me?
RNOR (Resident but Not Ordinarily Resident) is a transitional tax residency status for returning NRIs. It functions as a bridge between being a Non-Resident and becoming a full Ordinary Resident.
You qualify for this status if you meet one of the following criteria:
- You have been an NRI for 9 out of the last 10 financial years.
- You have lived in India for 729 days or less in the preceding 7 financial years.
- If you are an Indian Citizen or Person of Indian Origin (PIO) with Indian income exceeding ₹15 Lakhs, you become an RNOR if you stay in India for 120 to 181 days (instead of the usual 182).
- If you are an Indian Citizen with Indian income exceeding ₹15 Lakhs and you are not liable to tax in any other country, you are automatically treated as a "Deemed Resident" in India. Deemed Residents are always classified as RNORs.
This status grants you a 1 to 3-year window where your global income is treated differently from that of a standard Indian resident.
What benefits can I get from this status?
As long as you hold RNOR status, your foreign income is NOT taxable in India, provided it is received outside India first. This allows you to manage your US assets without immediate tax liability in India.
- Global Stocks & ETFs: If you sell them while you are RNOR, the capital gains are tax-free in India. You only pay applicable US taxes as a non-resident (0% on gains for non-residents). You can also sell your stocks and ETFs while you hold the RNOR status to reset your cost basis without paying any taxes.
- US Bank Interest: The interest earned in your US accounts is tax-free in India.
- Dividends: Tax-free in India (US withholds 25% tax since you are an Indian resident, upon filing Form W-8BEN).
- 401(k) Protection: Withdrawals from your retirement accounts are not taxed by India during this period.
To utilize these exemptions, you must receive the funds in your US bank account first. If you wire sale proceeds or dividends directly to an Indian bank account, the income is considered "received in India" and becomes fully taxable.
Common Questions US NRIs Have About Moving Back
Can I send money from India and buy more US or overseas stocks?
Yes. You can remit up to $250,000 per financial year under the Liberalised Remittance Scheme (LRS) to invest in foreign stocks. However, be aware that transfers exceeding ₹10 Lakhs in a year attract a 20% TCS (Tax Collected at Source), which you can claim back as a refund when filing your income tax return.
To learn more about how you can send money abroad while complying to Indian regulations, read our Complete LRS Guide for Indians in 2026.
When do I become subject to FEMA upon moving back?
You become a resident under FEMA immediately upon landing in India if your intention is to stay for an uncertain period or for employment/business. Unlike tax residency (which counts days), FEMA residency applies the moment you return to settle.
Can I continue operating my foreign bank account?
Yes. Section 6(4) of FEMA allows you to continue holding and operating foreign bank accounts, stocks, and properties if they were acquired when you were a resident outside India. You are not legally required to close them.
Can I keep my NRO account?
No. Once your status changes to Resident, you are legally required to inform your bank and convert your NRO account to a standard Resident Savings Account. Continuing to hold an NRO account as a resident is a violation of FEMA regulations.
About Paasa
Paasa is a global investing platform built specifically for Indian residents and returning NRIs. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore and support 9 global currencies.
- Seamless "In-Kind" Transfers (ACATS): You can move your entire US stock portfolio (from brokers like Robinhood, Schwab, Fidelity, E*TRADE, and more) directly to Paasa. This allows you to consolidate your assets in one place without triggering a tax event.
- The Compliance Advantage: Paasa provides the exact reports you need for your Indian tax returns and foreign asset disclosures, eliminating the need for manual calculations.
- Estate Tax Protection: Paasa offers access to Ireland-domiciled (UCITS) ETFs, allowing you to legally shield your long-term investments from the 40% US Estate Tax that applies to non-residents.
Disclaimer
This article is intended solely for information and does not constitute investment, tax, or legal advice. Global investments carry risks, including currency risk, political risk, and market volatility. Please seek advice from qualified financial, tax, and legal professionals before acting.
