India: RNOR and the deemed-resident trap

India has one feature most expats have never heard of: a halfway status called Resident but Not Ordinarily Resident, or RNOR. For your first two or three tax years after you move, it keeps your foreign pension, dividends and gains outside Indian tax, even while you live there full time.

This guide covers Indian personal tax for people moving to India in the 2026-27 tax year: RNOR, the residence tests, the new regime rates, crypto, EPF and visas.

The key question is simple. Which of India's three residence statuses do you have this year, and where does each part of your income come from?

What's changed: the Income-tax Act 2025 replaced the Income-tax Act 1961 on 1 April 2026. The old "previous year" and "assessment year" become one "tax year", so 1 April 2026 to 31 March 2027 is tax year 2026-27. Section numbers changed, but the residence tests carried over, and the Budget on 1 February 2026 left personal tax rates unchanged. People with business or professional income who don't need an audit now have until 31 August, not 31 July, to file.

📋 India tax at a glance for 2026-27

US dollar figures use about ₹97 to US$1 (the US Federal Reserve's rate was ₹96.73 on 9 October 2026). In India, 1 lakh is ₹100,000 and 1 crore is ₹10 million.

RNOR: India's built-in break for new arrivals

Why does residence matter so much in India? Because India has two kinds of resident, and which one you are decides whether your foreign income is taxed at all.

Image 1 — your first years in India can leave foreign income untaxed

If you're resident, you're then either ordinarily resident or not ordinarily resident (RNOR). You're RNOR for a tax year if either of these applies:

• you were non-resident in at least 9 of the 10 tax years before it, or

• you spent 729 days or fewer in India in total over the 7 tax years before it.

As an RNOR, you're taxed on Indian income only. Foreign income is left out, unless it comes from a business controlled in India or a profession set up in India. That's why the timing of foreign sales and foreign income can matter so much in your first years.

How long does it last? If you've never lived in India, usually two tax years, or three if you arrive part-way through a tax year but still spend 182 days in India that year. After that you fail both tests.

RNOR is automatic, but your status is worked out again each tax year, so keep your travel records. Have foreign income paid into a foreign account rather than straight to India, and take advice before relying on RNOR for a large sale.

👉 Income Tax Department: Income-tax Act 2025 as amended by the Finance Act 2026 (section 6, residence and RNOR)

When you become tax resident in India

India tests residence for each tax year from 1 April to 31 March. You're resident if either of these applies:

• you're in India for 182 days or more in the tax year, or

• you're in India for 60 days or more in the tax year and 365 days or more in total over the four tax years before it.

In your first year, only the 182-day test usually matters, so arriving after 1 October normally leaves you non-resident for that tax year.

Special rules for Indian citizens and people of Indian origin

• Visiting India: if you're an Indian citizen or a person of Indian origin living abroad and visiting India, the 60-day test doesn't apply, so only 182 days counts. If your total income, excluding foreign income, is more than ₹15 lakh, the 60 days becomes 120 days instead. If you're caught this way, you're treated as RNOR.

• Deemed residence: an Indian citizen with income, excluding foreign income, of more than ₹15 lakh is deemed resident if no other country taxes them because of domicile, residence or a similar test. Days don't matter, so this mainly catches Indian citizens living in no-tax countries such as the UAE. Deemed residents are RNOR, so foreign income stays untaxed.

How you stop being resident

You become non-resident in a tax year when you're in India for fewer than 182 days and fail the 60-day test. That second test is the catch. After years living in India, you'll have 365 days in the four-year look-back for some time after you leave, so 60 days of return visits can keep you resident.

Once you're non-resident, India taxes only income that arises in India or that you receive in India. India doesn't charge an exit tax on your assets when you leave.

Income tax rates for 2026-27

The new tax regime is the default. It has lower rates but few deductions. You can opt out into the old regime, with rates of 5%, 20% and 30% above a tax-free ₹2.5 lakh (below age 60), and more deductions.

India income tax rates for 2026-27 (new tax regime)

Source: Income-tax Act 2025, section 202, unchanged by the Finance Act 2026.

Above ₹50 lakh of total income, a surcharge is added to the tax: 10% up to ₹1 crore, 15% up to ₹2 crore and 25% above that, capped at 15% on dividends and capital gains taxed at special rates. A 4% health and education cess then applies to the total.

Employees in the new regime get a ₹75,000 standard deduction. A rebate of up to ₹60,000 means residents with income up to ₹12 lakh pay no tax.

Worked example

• You're a foreign national on an employment visa, resident in India for 2026-27 and earning ₹97 lakh (about US$100k).

• After the ₹75,000 standard deduction, your taxable income is ₹96.25 lakh. Tax on the slabs is ₹24.68 lakh.

• The 10% surcharge adds ₹2.47 lakh, and the 4% cess adds ₹1.09 lakh.

Your income tax is about ₹28.2 lakh, or 29% of your salary. EPF adds 12% of your basic pay. If basic pay is half your salary, that's ₹5.82 lakh, taking the all-in cost to about ₹34 lakh, or 35%.

👉 Income Tax Department e-filing portal: new and old regime slabs, rebate, surcharge and cess

👉 Ministry of Finance: Finance Bill 2026 memorandum (rates for tax year 2026-27 unchanged)

👉 Press Information Bureau: the Income Tax Act 2025 comes into effect from 1 April 2026

Freelancing in India

Self-employed profit is taxed on the same slabs, surcharge and cess as a salary. There's no compulsory social security for the self-employed, so US$100k of profit costs about 29%.

Smaller professionals can use presumptive taxation. If you're resident, work in a listed profession such as legal, medical, engineering, accountancy or technical consultancy, and have gross receipts of no more than ₹50 lakh (₹75 lakh if no more than 5% is cash), you can declare 50% of receipts as profit and pay all your advance tax by 15 March.

RNOR doesn't help here: work you do in India is Indian income, even for clients abroad. The bigger hurdle for foreigners is that there's no visa for freelancing.

👉 Income Tax Department: presumptive taxation for professionals

Crypto, investments and pensions

How is crypto taxed in India? Harshly. Income from transferring virtual digital assets is taxed at a flat 30%, plus surcharge and cess:

• you can only deduct what the asset cost you, not other expenses

• losses can't be set off against any other income, including other crypto gains

• holding period doesn't matter, so there's no long-term rate

• a buyer usually deducts 1% tax at source when paying a resident for crypto

On a US$100k gain, surcharge and cess take the total to about 34%. If you're RNOR, don't assume crypto on a foreign exchange is foreign income: the law doesn't say where crypto is located.

Other investments are taxed like this once you're ordinarily resident:

• Long-term capital gains: 12.5% for transfers from 23 July 2024, with no indexation (residents can still choose 20% with indexation on land or buildings bought before that date). Listed shares and equity funds are long-term after 12 months, and the first ₹1.25 lakh of gains on them is tax free each year. Most other assets, including foreign and unlisted shares, need 24 months.

• Short-term gains: 20% on listed shares and equity funds. Other short-term gains are taxed at your normal rates.

• Dividends and interest: taxed at your normal rates, with the surcharge on dividends capped at 15%.

• Pensions: a pension is taxed as salary, so the ₹75,000 standard deduction applies. A foreign pension isn't taxed while you're RNOR.

India has no inheritance tax and no wealth tax.

👉 Income Tax Department: taxation of virtual digital assets

👉 Income Tax Department: tax on long-term capital gains

👉 Income Tax Department: tax on short-term capital gains

Social security: EPF for international workers

India's main scheme for employees is the Employees' Provident Fund (EPF). For Indian staff, contributions are usually capped at pay of ₹15,000 a month. Foreign employees are "international workers":

• you're enrolled from your first day of work for an employer covered by EPF

• you pay 12% of basic pay and dearness allowance, your employer pays 12%, and there's no pay cap

• unless a social security agreement covers you, you can only withdraw on retirement after 58, or on permanent and total incapacity

India has social security agreements with Belgium, Germany, Switzerland, Luxembourg, France, Denmark, South Korea, the Netherlands, Hungary, Finland, Sweden, the Czech Republic, Norway, Austria, Canada, Australia, Japan, Portugal, Brazil and Quebec. If you're posted from one of these countries and hold a certificate of coverage, you can be excluded and stay in your home scheme. The EPFO's list doesn't show it yet, but a UK-India Double Contributions Convention has been in force since 15 July 2026, so UK employees posted to India for a limited period can stay in UK National Insurance. There's no agreement with the United States.

👉 EPFO: FAQs on contribution rates and international workers

👉 EPFO: international workers and social security agreements

👉 HMRC National Insurance Manual: the UK-India Double Contributions Convention

Double tax treaties

Does India have double tax treaties? Yes. India has a wide network of comprehensive double taxation avoidance agreements, which the Income Tax Department publishes in full. Partners include the UK, the United States, the UAE, Singapore, Germany, France and Australia.

If you're resident in India and another country at once, the treaty's tie-breaker decides where you're treated as resident.

👉 Income Tax Department: double taxation avoidance agreements

👉 Income Tax Department: the India-UK comprehensive agreement

Visas: there's no digital nomad visa

India has no digital nomad or remote work visa. These are the main routes:

India visa routes for longer stays in 2026

👉 Government of India: e-Visa types and conditions

👉 Bureau of Immigration: working in India and the employment visa

Who is India good for?

How does India compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on the 2026-27 tax year and the all-in cost including EPF. The Retirees and Investment income ratings count RNOR status, which most new arrivals have for their first two or three tax years.

☑️ Who is India good for? Tax ratings for expats in 2026

Filing and deadlines

The tax year runs from 1 April to 31 March. Employers deduct tax from salaries each month. If you have other income, you pay advance tax in instalments during the year.

For returns of income under the Finance Act 2026:

• 31 July: most individuals, including employees and people with investment income

• 31 August: people with business or professional income who don't need an audit

• 31 October: people whose accounts must be audited

For 2026-27, that means 31 July 2027 for most employees. You'll need a Permanent Account Number (PAN). People with business income who want the old regime must opt out on the prescribed form by the filing date.

👉 Income Tax Department: Finance Act 2026 (return due dates)

Frequently asked questions

What is RNOR status in India?

Resident but Not Ordinarily Resident (RNOR) applies if you're resident in India but were non-resident in 9 of the previous 10 tax years, or spent 729 days or fewer in India over the previous 7. You're taxed on Indian income only, not foreign income.

How many days make you tax resident in India?

You're resident for a tax year if you spend 182 days or more in India, or 60 days or more in the year plus 365 days or more over the previous four tax years. For Indian citizens and people of Indian origin visiting India, the 60-day test is replaced by 182 days, or 120 days if their Indian income is over ₹15 lakh.

What are the income tax rates in India for 2026-27?

Under the default new regime, rates rise from 0% on the first ₹4 lakh to 30% above ₹24 lakh. A surcharge applies above ₹50 lakh, and a 4% cess applies to the total.

How is crypto taxed in India?

Gains on virtual digital assets are taxed at a flat 30%, plus surcharge and cess, whatever the holding period. Only the cost is deductible and losses can't be set off.

Do foreigners pay EPF in India?

Usually. Foreign employees pay 12% of basic pay as international workers, with no salary cap. People posted from a country with a social security agreement who hold a certificate of coverage can be excluded.

Does India have a digital nomad visa?

No. e-Tourist visas allow up to 180 days a calendar year but not employment. To work in India you need an employment visa, with an Indian employer or project and a salary above ₹16.25 lakh.

Where to go next

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