Moving to India? Your ideal window is now open
TLDR
If you are moving back to India from the US and you have flexibility on dates, land in India between 2 October and 30 January.
Move in that window and you typically get: India
A year of Non-Resident (NR) status in India for the year you arrive
Two more years of RNOR after that
USA
Non-Resident Alien (NRA) status in the US from the first full calendar year after you leave
That gives you the longest stretch where neither India nor the US taxes your US capital gains. Use that stretch to sell and rebuy your US stocks and reset your cost basis. Done right, this can save you million.
The window opened on 2 October.
Contents
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India residential status
India decides your tax status one tax year at a time. The tax year runs 1 April to 31 March.
Are you Resident?
You are Resident for a tax year if either is true:
You are in India for 182 days or more in that year, or
You are in India for 60 days or more in that year and 365 days or more in the four years before it.
Simplified Residential Status Chart:
For most returning NRIs, the second test does not bite.
If you have been visiting India for two or three weeks a year, you will not have 365 days in the previous four years. So the number that matters is 182.
At 181 days you are a Non-Resident.
At 182 you are Resident. There is no rounding and no grace.
If Resident, are you RNOR or ROR?
Once you are Resident, you are Resident but Not Ordinarily Resident (RNOR) if either is true:
You were a Non-Resident in 9 of the 10 previous years, or
You spent 729 days or less in India across the 7 previous years.
Otherwise you are Resident and Ordinarily Resident (ROR).
Why this matters
Status | What India taxes |
NR | Only income earned or received in India |
RNOR | Same as NR, plus foreign income from a business controlled or profession set up in India |
ROR | Your worldwide income, including gains on your US stocks |
For a salaried returnee, NR and RNOR work almost the same way. Your US dividends and capital gains stay outside the Indian tax net. Once you become ROR, everything is in.
The US Substantial Presence Test
If you are on a visa (H-1B, L-1 and so on) and not a green card holder or citizen, the US decides your status each calendar year using the Substantial Presence Test (SPT).
You are a US tax resident for a calendar year if:
You were in the US for at least 31 days in that year, and
This sum is 183 or more: all days this year + 1/3 of days last year + 1/6 of days the year before.
Fail either and you are a Non-Resident Alien (NRA)
Simplified Chart for determination of US persons
The 31-day gate is the one to focus on.
If you are in the US for 30 days or fewer in a calendar year, the weighted sum does not matter. You are an NRA for that year.
Small example. Arjun has lived in the US full time for years and flies out on 25 January 2027. He spends 25 days in the US in 2027.
He fails the 31-day gate, so he is an NRA for all of 2027, even though his weighted total would be well above 183.
Why being an NRA matters
An NRA is generally not taxed by the US on capital gains from selling US stocks and ETFs, as long as they are in the US for less than 183 days that year. Dividends are still taxed at source (usually 25% under the India-US treaty), but gains are not.
Why you want the overlap
Put the two together:
India status | US status | Tax on your US stock gains |
ROR | US resident | Both countries want it (credit helps, but you still pay) |
NR/RNOR | US resident | US taxes it |
ROR | NRA | India taxes it |
NR/RNOR | NRA | Neither country taxes it |
Every month you sit in the last row is a month where you can realise gains on your US portfolio without paying tax anywhere.
The longer that overlap, the more room you have to plan.
Need help? Let’s talk.
Reyman Wealth helps returning Indians with planning their return to India, planning your RNOR period, resetting your cost basis and overall financial planning.
Why 2 October to 30 January
2 October start
Count the days from 2 October 2026 to 31 March 2027, both dates included:
Month | Days |
October (from the 2nd) | 30 |
November | 30 |
December | 31 |
January | 31 |
February | 28 |
March | 31 |
Total | 181 |
181 is below 182.
So if you land on or after 2 October, you are a Non-Resident for tax year 2026-27, the year you arrive.
That year does not count against you in the RNOR tests. You then get two RNOR years on top of it.
Land in August or September instead and your arrival year is already a Resident year. You burn one of your RNOR years in a part year.
Land on 1 October 2026 instead of 2 October and you hit exactly 182 days. That one day costs you a full year of tax-free planning room.
30 January end
If you leave the US on or before 30 January, you are in the US for 30 days or fewer that calendar year. You fail the 31 day gate and you are an NRA for the full year.
Leave on 31 January and you are at 31 days. That is enough to make you a US resident for the year again.
Leave in February or later and you are a US resident for part of that year. You file a dual-status return and your clean NRA year starts a year later.
Example: Riya, August vs October
Riya is on an H-1B in Seattle. She has visited India for about three weeks a year and plans to move back in 2026.
Land 20 Aug 2026 | Land 20 Oct 2026 | |
Days in India, 2026-27 | 224 | 163 |
2026-27 | RNOR | NR |
2027-28 | RNOR | RNOR |
2028-29 | ROR | RNOR |
2029-30 | ROR | ROR |
US status, 2026 | Resident (dual-status) | Resident (dual-status) |
US status, 2027 onwards | NRA | NRA |
Overlap window | Jan 2027 to Mar 2028 | Jan 2027 to Mar 2029 |
Length of overlap | 15 months | 27 months |
Moving two months later buys Riya a full extra year of tax-free planning room.
Note: This assumes no other India trips in 2026-27 before she moves. Days from an April or May visit count towards the 182.
The cost basis reset strategy
Once you are in the overlap window, the play is simple.
Sell your appreciated US stocks and ETFs. Buy them back right away. You pay no tax on the sale in either country. Your portfolio looks the same the next day. But your cost basis is now today’s price, not what you paid years ago.
When you later become ROR and eventually sell, India only taxes the gain above the reset price.
Reyman Tips: The timing here is where most attempts go wrong. Sell at the wrong time and the US taxes the whole gain, because you are still a US resident that year. Sell one month after you turn ROR and India taxes it. The trade is easy. Placing it on the right date is not.
We wrote a detailed article on how to reset your cost basis during the RNOR period to book tax free capital gains.
The Costly Mistake vs The Reset Strategy
Riya holds US ETFs she bought for $200,000.
They are worth $500,000 in February 2027. She sells them in 2031, as an ROR, for $650,000.
Indian long-term capital gains on foreign shares are taxed at 12.5%, plus surcharge and cess. Call it about 15% all-in at her income level.
The Costly Mistake | The Reset Strategy | |
What she does | Holds, sells in 2031 | Sells and rebuys in Feb 2027, sells in 2031 |
Tax on Feb 2027 sale | Nil | Nil (NR in India, NRA in US) |
Cost basis for India | $200,000 | $500,000 |
Taxable gain in 2031 | $450,000 | $150,000 |
India tax at ~15% | ~$67,500 | ~$22,500 |
Saving | ~$45,000 (about ₹40 lakh at ₹88 to the dollar) |
Two sell and rebuy trades. About ₹40 lakh saved.
Reyman Tips: Reset in tranches across the window rather than on one day. If markets rise after your first reset, you can reset again at the higher price before you turn ROR. India computes gains in rupees, using the exchange rate on the purchase and sale dates. The reset locks in the rupee value too, which also shelters currency gains. Keep the trade confirmations and the rates used.
Not sure what to do with your 401K?
Our team of experts is always happy to discuss all the facts of your case and assist you with the best outcome for your case. Feel free to contact us:
The issues
Green card holders and US citizens: This does not work. The US taxes you on worldwide income no matter where you live. The strategy is for visa holders.
Leap years: From 2 October to 31 March is 182 days when February has 29 days. For a move in late 2027 (tax year ending March 2028), the maths changes.
Earlier visits count Any India trip in the same April to March year adds to your 182.
The 120 day rule: if your India-sourced income is over ₹15 lakh and you have spent 365+ days in India over the previous four years, the threshold can drop to 120 days.
State taxes: Some states, California in particular, can try to keep treating you as a resident. Close out your state ties properly.
Retirement accounts are different: 401(k)s and IRAs do not get a reset this way. Leave them alone and plan them separately.
Each one of these is a separate way to lose the benefit, and they interact. A visit in May, a high Indian rental income and a ticket booked for 31 January can each undo a plan that looked fine on paper.
Think of US Estate taxes
We wrote a full article on US estate taxes and how to plan around them for returning Indians which you may find useful.
If you're a returning NRI who needs help with any of the following, feel free to reach out. Our team of experts is always happy to help:
Tax planning for return to India
Planning RNOR status in India and NRA status in USA
Assistance with cost basis reset - Capital gains calculation and reporting requirements
Assistance with re-designation of Indian bank accounts - NRO/ NRE to resident accounts (in line with FEMA regulations)
Comprehensive evaluation of holdings/ assets from tax perspective.
Financial planning and Investing
Spending optimization, EMIs & credit cards
Insurance advisory
ITR Filing in India
Will & estate planning
Most other financial queries or challenges
You can also email us at help@reymanwealth.com
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