Moving back to India from the US?
Here's what changes for your 401(k), RSUs, US brokerage accounts, and tax residency.
ISO Certified
SIPC Insured
SEBI RIATax residency
When do you become an Indian tax resident again?
Your residency status is determined by days spent in India.
Either of these makes you a tax resident
Rule 1
182 days or morein India during one financial year.
Rule 2
60 days or more this yearand365 days or more across the previous 4
Once you're a resident, your global income, including US dividends and capital gains, becomes taxable in India. Your move date relative to the financial year can shift this by a full year.
Note: Due to the US substantial presence rule, depending on your travel history, you could temporarily be considered a tax resident of both countries.
Transitional status
What is RNOR, and why does it matter?
Between NRI and ordinary Indian resident, there's a transitional status called Resident but Not Ordinarily Resident (RNOR). During this window, your US-sourced income is generally not taxed in India.
You qualify if
- 1You were an NRI for 9 of the previous 10 years, or
- 2You spent fewer than 730 days in India over the previous 7 years.
RNOR window typically lasts
2 – 3 years
Outside Indian tax during RNOR
- ✓Capital gains from selling US stocks
- ✓Dividends from US equities
- ✓US rental income
- ✓Interest from US bank accounts
Crucial Rule: To utilize these exemptions, funds must be received in your US bank account first. Direct wiring to an Indian account makes them taxable.
Filing requirements
Disclosures and filings at each stage
Your filing obligations are limited during RNOR, and ramp up sharply once you become an Ordinary Resident.
| Requirement | NRI | RNOR | Ordinary Resident |
|---|---|---|---|
| US income taxable in India | No | No | Yes |
| Schedule FA (foreign asset disclosure) | No | No | Yes |
| Schedule FSI (foreign source income) | No | No | Yes |
| Form 67 (foreign tax credit claim) | No | No* | Only if claiming foreign tax credit |
| Advance tax on foreign income | No | No | Yes |
| Black Money Act penalties for non-disclosure | No | No | Yes |
* Form 67 may apply to an RNOR in case of foreign income that becomes taxable in India.
The key shift from RNOR to Ordinary Resident: your global income becomes taxable, and you need to disclose all US brokerage accounts and holdings, 401(k)s, and property to the Indian tax authorities.
Brokerage accounts
What happens to your US brokerage accounts?
When you move back, you become a "Non-Resident Alien" (NRA) in the US. Most brokerages do not support non-US residents and may force you to liquidate.
Option 1: Transfer via ACATS (Recommended)
Move your entire portfolio "in-kind" to an India-friendly global broker like Paasa without selling. No capital gains triggered.
Option 2: Liquidate your holdings
Sell your positions and pay tax on the gains realized.
Equity compensation
What happens to your RSUs and stock options?
Tax treatment depends heavily on your equity plan documents and residency status on the vesting date.
1. Vesting during NRI status
Taxed as ordinary US income. IRS withholds tax on the vesting date.
2. Vesting during RNOR
Taxed in the US only. No Indian tax on vesting, as it is foreign-sourced income.
3. Vesting after becoming ordinary resident
Full market value added to Indian income at slab rate. India and the US apportion income based on workdays in each country.
Retirement accounts
Should you withdraw your 401(k) or IRA?
You are not required to close your 401(k) when leaving the US. You can leave it to grow tax-deferred or withdraw it early.
| Account | New Contributions | US Tax | Indian Tax (as Ordinary Resident) |
|---|---|---|---|
| 401(k) | Not possible | Ordinary income (+10% penalty if under 59½) | Likely exempt under DTAA Art. 20 |
| Traditional IRA | Not possible | Ordinary income | Likely exempt under DTAA Art. 20 |
| Roth IRA | Not possible | Tax-free | Unclear in India; seek cross-border advice |
Property
What happens to your US property?
There is no US exit tax on property. You can continue to hold and rent it out indefinitely.
Rental income
The US retains primary taxing rights. India also taxes this but provides foreign tax credit for the US tax already paid.
Capital gains on sale
The US retains primary taxing rights. India also retains the right to tax as your country of residence once you are a full ROR.
Exit tax
Will you owe a US exit tax when you leave?
Visa Holders (H-1B, L-1, etc.)
The US does not levy a blanket exit tax on departing visa holders (H-1B, L-1, etc.).
Covered Expatriates
The US Exit Tax only applies to "Covered Expatriates", specifically those who are formally renouncing US citizenship or abandoning a "long-term" Green Card (held in 8 of the last 15 years) and meet certain net worth or tax liability thresholds.
FAQ
Common questions returning US NRIs ask
Country guides
Guides for where you're returning from
Each guide breaks down brokerage, retirement, tax, and exit considerations for your origin country.
How Paasa helps
Built for returning Indian professionals
From shielding your wealth from the US Estate Tax to generating exact Schedule FA filings, Paasa is the financial home for your transition back from the US.
In-kind US brokerage transfers
Move accounts from Robinhood, Fidelity, or Schwab via ACATS so you don't book taxable capital gains.
Estate Tax Protection
Direct access to Ireland-domiciled UCITS ETFs, allowing you to legally shield your investments from the 40% US Estate Tax applied to non-residents.
Schedule FA and FSI reports
Year-end disclosures generated for every foreign holding, tailored exactly for Indian reporting requirements.
LRS-compliant remittance
Send money abroad under the USD 250,000 annual window to keep compounding your wealth globally.
RNOR-aware strategy
Built around your specific planning window so you can optimize cost-basis resets before the window closes.
You own your assets
Your holdings are held in your name at our global custodian, Interactive Brokers.
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Book a call with a Paasa advisor to map out your RNOR window, ACATS transfers, and double taxation avoidance strategy.