\n| Royalties (apps, books, Spotify, YouTube, platforms)<\/td>\n | 15\u201320%<\/td>\n | 30%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n This effectively doubles the US tax cost for residents but not ordinary residents during their transition years.<\/p>\n India has not changed its position:<\/strong> <\/span>Residents but Not Ordinarily Residents remain \u201cresidents\u201d under Indian domestic law. The issue arises because Double Taxation Avoidance Agreement residency requires liability to tax on global income, not merely residential status. This is a treaty interpretation issue, not a change in Indian law.<\/p>\n<\/span>Practical Consequences & Planning Points<\/strong><\/span><\/span><\/h3>\nReturning Indians should reassess:<\/p>\n \n- Timing of return (before or after liquidating US investments).<\/li>\n
- Holding United States of America assets through entities or trusts.<\/li>\n
- Shifting investments before the Residents but Not Ordinarily Residents phase begins.<\/li>\n
- Use of third-country structures (where legally permissible).<\/li>\n
- Whether to claim treaty benefits and risk IRS scrutiny.<\/li>\n<\/ul>\n
In many cases, deferring United States of America income recognition until becoming ROR (when India can offer foreign tax credit) may be more tax-efficient.<\/p>\n The United States of America clarification significantly alters the tax landscape for RNOR Indians. While RNOR status provides relief under Indian tax law, it may now increase United States of America withholding taxes due to loss of DTAA benefits. Returning Indians should proactively review cross-border income streams and restructure finances well before changing tax residency.<\/p>\n <\/span>Checklist for Indians Planning to Return from the US<\/strong><\/span><\/span><\/h2>\n![\"Indians](\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/12\/Indians-Planning-to-Return-from-the-US.jpeg\") <\/p>\n
\n- Residential status planning is the most critical step for Indians planning to return from the United States of America. First of all, a person must determine likely residents but not ordinary residents, usually 2\u20133 financial years after return & based on days of stay in India and past residency history.<\/li>\n
- RNOR Plan the year of return carefully and Returning before 31 March may reduce RNOR years and returning after 1 April often preserves residents’ but Not Ordinarily Residents’ benefits longer<\/li>\n
- Residents but Not Ordinarily Residents avoid unintended ROR status for Track days in India strictly (especially first 2 years)<\/li>\n<\/ul>\n
<\/span>Before returning, the person must review their US investments & income over there. <\/strong><\/span><\/span><\/h3>\n\n- A person must make a list of all United States of America source income, like US stocks\/ETFs\/mutual funds, bank FDs\/bonds, ESPPs\/RSUs, rental income, and royalties (apps, books, YouTube, Spotify, and SaaS platforms).<\/li>\n
- That Person must evaluate impact of 30% United States of America withholding Whether RNOR may lose Double Taxation Avoidance Agreement benefit, so Decide whether to Liquidate assets before return or Hold and accept higher United States of America tax or Restructure ownership<\/li>\n
- Person must consider selling appreciated United States of America assets while still a United States of America tax resident, like capital gains, which may be more efficient pre-return.<\/li>\n<\/ul>\n
<\/span>New Issue must be checked RNOR vs DTAA Risk Assessment <\/strong><\/span><\/span><\/h3>\n\n- A person must assume the United States of America may deny Double Taxation Avoidance Agreement benefits during RNOR period. and Expect 30% withholding on Dividends, interest, & royalties.<\/li>\n
- Residents but not ordinary residents, must evaluate whether treaty claims via Form W-8BEN can be substantiated<\/li>\n
- RNOR must maintain documentation if treaty benefit is claimed (risk of IRS scrutiny)<\/li>\n<\/ul>\n
<\/span>Timing of Income Recognition<\/strong><\/span><\/span><\/h3>\nResidents, but not ordinarily residents, should Defer US dividends\/royalties, if possible, until You become ROR, or you can claim Foreign Tax Credit (FTC) in India. Also RNOR should avoid high US income during RNOR phase, when credit is unavailable<\/p>\n <\/span>Bank Accounts & Financial Structuring<\/strong><\/span><\/span><\/h3>\n\n- RNOR Convert Indian bank accounts from Resident savings to NRO\/NRE (as applicable)<\/li>\n
- Residents but not ordinarily residents, must review United States of America bank accounts and confirm banks allow non-resident maintenance and try to Avoid automatic closure risks.<\/li>\n
- RNOR should evaluate remittance strategy: Bring funds to India before return where possible<\/li>\n<\/ul>\n
<\/span>Stock Options, Restricted Stock Units and Employee Stock Option Plans<\/strong><\/span><\/span><\/h3>\n\n- RNOR review vesting schedules Pre-return vesting vs post-return taxation & India taxes Employee Stock Option Plans differently once resident<\/li>\n
- Residents but not ordinary residents, understand double tax exposure on US withholding and Indian taxation once ROR<\/li>\n
- RNOR must Obtain valuation and grant documents<\/li>\n<\/ul>\n
<\/span>Retirement Accounts (401k, IRA)<\/strong><\/span><\/span><\/h3>\n\n- RNOR do not<\/strong> rush to liquidate High United States of America penalties & tax & Understand Indian tax treatment like tax on receipt when ROR & Complex reporting under Schedule FA<\/li>\n
- Residents but not ordinary residents, should maintain clean records of contributions, employer matches & rollovers.<\/li>\n<\/ul>\n
<\/span>Indian Tax & Compliance Preparation<\/strong><\/span><\/span><\/h3>\n\n- PAN & Aadhaar linkage checked<\/li>\n
- Understand applicable ITR form (ITR-2 \/ ITR-3)<\/li>\n
- Prepare for Schedule FA (foreign assets) once ROR, FTC claims under Rule 128 & Advance tax obligations<\/li>\n<\/ul>\n
<\/span>FEMA & RBI Compliance<\/strong><\/span><\/span><\/h3>\n\n- RNOR must re-designate accounts on change of residency<\/li>\n
- Residents but Not Ordinarily Residents avoid holding resident-only instruments after becoming non-resident & Comply with FEMA asset holding rules<\/li>\n<\/ul>\n
Highly important documentation & records to be maintained by residents but not ordinary residents, like United States of America tax returns (last 3\u20135 years), W-2, 1099, brokerage statements, Cost & acquisition records of assets, and proof of tax paid in the United States of America. These are critical for FTC claims, assessments, and notices in India.<\/p>\n RNOR status is beneficial under Indian law but may now be costly from a United States of America tax perspective. Tax planning before returning, not after, is the difference between tax efficiency and permanent tax leakage.<\/p>\n Residents, but not ordinary residents, should consult a tax expert related to cross-border CA\/CPA, a Double Taxation Avoidance Agreement specialist, & an investment advisor familiar with RNOR planning. Moreover, avoid \u201cgeneric advice\u201d; RNOR planning is case-specific<\/p>\n <\/span>About Rajput Jain and Associates\u00a0<\/strong><\/span><\/span><\/h3>\nRajput Jain and Associates delivers bespoke Tax planning for high-income individuals, combining proactive tax planning with end\u2011to\u2011end tax planning services that optimise liabilities while ensuring full compliance. Our specialists provide actionable personal tax planning strategies covering income structuring, deductions, capital gains, and succession so that professionals, entrepreneurs, and HNIs benefit from disciplined, year\u2011round guidance. With client\u2011first execution and measurable outcomes, we align our tax planning services with your life goals, turning complex rules into clear, effective personal tax planning solutions. Contrct us at 9555 555 480, or Singh@carajput.com<\/div>\n","protected":false},"excerpt":{"rendered":" US Clarification on Tax Residency May Increase Tax Burden for Returning Indians (RNORs) The India\u2013US Double Taxation Avoidance Agreement provides concessional tax rates on certain income streams, such as dividends, interest, and royalties, to individuals who qualify as tax residents of either India or the United States. Indians returning from the US often qualify as …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[623],"tags":[1255],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9780"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=9780"}],"version-history":[{"count":5,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9780\/revisions"}],"predecessor-version":[{"id":10092,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9780\/revisions\/10092"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=9780"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=9780"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=9780"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} |
![\"STARTUP](\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2021\/05\/STARTUP-COMPANY-IN-INDIA.jpg\")
<\/p>\n