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Jul 16, 2025
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Income tax guide for NRIs returning to India from abroad: Here’s how to understand your tax liabilities for smoother transition
For non-resident Indians (NRIs) who have spent years abroad, homecoming isn’t just a change of address, it’s a full-circle moment. There’s a mix of excitement, nostalgia, hope, and even a bit of nervous anticipation. One isn’t just relocating, but rediscovering. Your relatives may welcome you with open arms, but the Income Tax Department greets you with Form 26AS and a fresh set of tax rules. If you’re planning to settle in India, understanding how your tax residency status changes—and what that means for your income—is as important as getting your shipping container through customs.
Decoding tax residency
Contrary to the notion that NRIs’ entire global income becomes taxable the moment they return to India, the tax liability here in fact is determined primarily by the number of days they’ve been physically present in the country during the concerned financial year.
India’s tax laws classify individuals into three categories: NRI, Resident but Not Ordinarily Resident (RNOR), and Resident and Ordinarily Resident (ROR).
Take the example of Aryan. After a 12-year stint in the US, he permanently returns to India at the start of July. As he’ll spend over 182 days here in the year 2025-26, he’ll be classified as a resident for the fiscal. But it doesn’t mean all his overseas income—like interest on his US savings or rent from a property in New York—becomes taxable here right away.
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