Indians returning from US could face bigger tax bills now
If you're an Indian moving back from the US, there's a new tax twist to watch out for.
The US has changed how it views certain returning Indians under the India-US tax treaty, which could mean higher taxes on your US income—especially if you fall under the "resident but not ordinary resident" (RNOR) category.
What's RNOR and why does it matter?
RNOR status usually applies to people who've just moved back and meet certain criteria, such as spending more than 120 but less than 182 days in India each year while earning ₹15 lakh or more from Indian sources, or other qualifying conditions.
For a limited period (typically 2-3 years), India only taxes their local income, and until now, the US gave them lower withholding rates (15-25%) on things like dividends and interest.
So what's changed—and why should you care?
The US now says RNORs aren't true Indian residents for treaty benefits. That means no more reduced tax rates—returnees could get hit with a flat 30% tax on dividends, interest, and royalties from the US.
This move doesn't match any change in Indian law but makes financial planning trickier for anyone coming home.
If this might affect you or your family, it's smart to chat with a tax pro about what comes next.