Moving from India Tax Guide 2026: RNOR Status, FEMA Repatriation & EPF/PPF on Departure

KEY INSIGHT

India has no exit tax — no deemed disposal of assets when you leave. The key transitions: you become NRI (Non-Resident Indian) under the Income Tax Act when you spend fewer than 182 days in India in a financial year (or fewer than 365 days over the previous 4 years combined with fewer than 60 days in the current year). RNOR status applies for up to 2 years after ceasing full residency — RNOR individuals are not taxed on foreign-source income. EPF can be withdrawn as an NRI. PPF cannot receive new contributions as an NRI but the existing balance matures normally. FEMA governs all capital repatriation.

At a glance

Key Facts

NRI vs RNOR: India's Residency Transition Status

India's Income Tax Act (ITA) classifies tax residency in three tiers: (1) Resident and Ordinarily Resident (ROR): taxed on worldwide income. Requirements: present in India ≥182 days in the financial year, OR ≥365 days in the last 4 years AND ≥60 days in the current year. Additionally, has been resident in India for at least 2 of the last 10 years and has been present in India for ≥730 days in the last 7 years. (2) Resident but Not Ordinarily Resident (RNOR): meets residency presence tests but lacks the 2-of-10 years or 730-day conditions. Tax treatment: taxed on Indian-source income and income from a business controlled from India — NOT on foreign-source income. This is a critical distinction — RNOR status gives 2 years of exemption on foreign income as you transition. (3) Non-Resident Indian (NRI): fewer than 182 days in India in the FY. NRI: taxed only on Indian-source income. The RNOR window (typically 2 years after you first start staying abroad) provides significant tax relief — use it to receive foreign investment income, foreign employment income, and repatriate funds without Indian income tax. FEMA definition of NRI: different from ITA — for FEMA purposes, an NRI is a person resident outside India (as per FEMA's own definition). These definitions diverge — ensure you understand which law applies to each specific question.

FEMA and Capital Repatriation for NRIs

FEMA (Foreign Exchange Management Act, 1999) governs all cross-border capital and current account transactions. For NRIs repatriating assets from India: (1) Current income (rent, dividends, pension): freely repatriable via NRE or NRO account. (2) Capital repatriation from NRO account: up to USD 1,000,000 per financial year with a CA certificate (Form 15CA/15CB). (3) NRE account funds: freely repatriable (principal and interest) — no limit. NRE (Non-Resident External) account: holds INR-equivalent of foreign earnings; fully repatriable. NRO (Non-Resident Ordinary) account: holds Indian-source income (rental, dividends) — repatriation limited to USD 1M/year with tax clearance. FCNR (Foreign Currency Non-Resident Bank) account: foreign currency deposits; fully repatriable. On becoming NRI: convert existing Indian savings accounts to NRO accounts. NRE accounts: open new NRE accounts for foreign income remitted to India. The CA certificate (Form 15CA and 15CB from a Chartered Accountant): required for most capital remittances above INR 500,000 — confirms Indian taxes have been paid on the remitted funds. The Liberalised Remittance Scheme (LRS): allows resident Indians to remit up to USD 250,000 per financial year — this applies to resident Indians, not NRIs. NRIs have their own repatriation rules as described above.

EPF, PPF, and NPS on Departure

EPF (Employees' Provident Fund): India's mandatory employer-employee retirement savings scheme (12% employee + 12% employer of basic wages). On ceasing Indian employment and becoming NRI: EPF can be withdrawn. Premature withdrawal (before 5 years of service): subject to TDS (Tax Deducted at Source) — 10% if PAN furnished; 30% if no PAN; TDS is not applicable if the withdrawal is after 5+ years of service. EPF withdrawal process: submit Form 19 (final PF settlement) via the UAN (Universal Account Number) portal (epfindia.gov.in). The UAN portal allows online claims for NRIs. Timeline: typically 10–20 working days. PPF (Public Provident Fund): a government-backed 15-year savings scheme with sovereign guarantee. NRIs cannot make new PPF contributions (since October 2017 — the RBI circular). Existing PPF account of an NRI: continues to earn interest until maturity (no new deposits); on maturity, the full balance is paid out. Extension: NRIs cannot extend their PPF beyond maturity. PPF interest: tax-free in India. NPS (National Pension System): NRIs can hold existing NPS accounts; cannot contribute new amounts under NPS (Tier II). On departure: NPS Tier I accumulates until retirement; can be withdrawn at 60 with 60% lump sum tax-free and 40% annuity.

Indian Property and Capital Gains as an NRI

Indian real estate held by NRIs is governed by FEMA and the Income Tax Act. Capital gains on sale of Indian property: taxable in India (LTCG — Long Term Capital Gains — if held >2 years: 12.5% without indexation (Finance Act 2024, effective July 23, 2024); properties purchased before July 23, 2024 may elect 20% with indexation or 12.5% without. STCG <2 years: taxable at marginal income tax rate). TDS on property purchase from NRI: the buyer must withhold TDS (Tax Deducted at Source) — 20% for LTCG or 30% for STCG — from the sale proceeds. The TDS withholding is often higher than the actual tax liability — apply to the Income Tax Officer for a lower TDS deduction certificate (Form 13) to reduce withholding to the actual tax rate. Repatriation of property sale proceeds: up to USD 1M per financial year from the NRO account (with Form 15CA/15CB). For inherited property or pre-1981 acquisitions: complex base cost rules apply; use a chartered accountant for the calculation. Residential property purchase by NRIs: NRIs can purchase residential and commercial property in India (no agricultural land). Purchase financed via NRE/FCNR loans: repatriation of principal is allowed up to the loan amount; profit remittance from NRO. Rental income from Indian property: taxable in India; file Indian income tax return annually for rental income as NRI.

Final Indian Income Tax Return and Ongoing NRI Obligations

Indian financial year: April 1 to March 31. Final Indian income tax return: file via Income Tax India e-Filing portal (incometaxindiaefiling.gov.in) for the FY in which you depart. Use ITR-2 (for NRIs with capital gains and foreign income in the transition year) or ITR-1/4 depending on income type. Filing deadline: July 31 (non-audit) or October 31 (audit) of the assessment year. As NRI: file Indian income tax returns annually if you have Indian-source income above the basic exemption limit (₹4 lakh under the new tax regime / ₹2.5 lakh under the old tax regime, FY 2025-26 — NRIs can choose either regime). PAN (Permanent Account Number): retain your Indian PAN — it is mandatory for all financial transactions in India, property sales, bank account operations, and TDS claims. PAN does not expire or become invalid for NRIs. Aadhaar: NRIs are not required to obtain Aadhaar (the biometric ID) — if you have one, it remains valid. Linking Aadhaar to PAN: NRIs are currently exempt from mandatory Aadhaar-PAN linking — verify current CBDT notifications. Double Taxation Avoidance Agreement (DTAA): India has DTAAs with 90+ countries. Use India's DTAA to avoid double taxation on Indian-source income in your new country of residence.

Introduction

India's tax departure rules are built around the RNOR (Resident but Not Ordinarily Resident) transitional status — a 2-year window after ceasing full Indian residency that provides significant tax relief on foreign income. Understanding when you become NRI (Non-Resident Indian) under the Income Tax Act and FEMA (Foreign Exchange Management Act) is the first critical step, as the ITA and FEMA use different definitions. India's FEMA regulations also govern how you can repatriate assets — the LRS (Liberalised Remittance Scheme) and repatriation rules for NRIs are distinct tracks that determine how much money can leave India and via what process.

Section 01

Moving from India to the USA: Key Planning Points

India-to-USA is one of the world's largest skilled migration corridors — H-1B, L-1, and EB-5 visa holders and their families. Key IN-US planning points:

RNOR window and US residency: During the RNOR period (typically 2 years after moving to the USA and becoming an NRI), you are not Indian-taxed on US-source income. This RNOR window is valuable — foreign investment income, US employment income, and capital gains realised while RNOR are exempt from Indian tax. After RNOR expires (2 years), you are a full NRI — only Indian-source income is Indian-taxable.

India-USA DTAA: India and the USA have a DTAA (1990) — US residents pay Indian tax on Indian-source income; claim FTC on US Form 1040 for Indian taxes paid. Indian dividends: 25% Indian withholding; reduced under DTAA. Indian property gains: India retains taxing rights; FTC on US return.

FBAR for Indian accounts: NRE, NRO, and FCNR accounts exceeding $10,000 must be reported on FinCEN Form 114 annually as a US resident. FATCA: Indian banks report US-person accounts to the IRS via CBDT's automatic exchange arrangement.

EPF and US tax: EPF is not clearly treated as a pension under the India-USA DTAA. The IRS may treat EPF as a foreign trust or retirement account — the tax treatment is uncertain. Withdraw EPF before becoming a US tax resident where possible to avoid complex US reporting.

💡

CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. Learn more about our affiliate partnerships

Best for INR International Transfers

Wise

★ 4.3 Trustpilot · 287,413 reviews

Move your Indian savings to your destination country at the real exchange rate when you leave. Wise is used by NRIs globally for transparent, low-cost international INR transfers.

⚠ For currency exchange only — not a bank account replacement.

Transfer INR Internationally with Wise →

International Health Insurance

SafetyWing

★ 4.2 Trustpilot · 3,259 reviews

Bridge the gap between Indian health cover and your destination country's cover. SafetyWing covers expats and remote workers worldwide with flexible international health plans.

⚠ Not a replacement for comprehensive private health insurance in high-cost countries.

Get International Health Cover from Day One →

Interested in reaching this audience? Advertise on CountryTaxCalc →

FAQ

Frequently Asked Questions

When exactly do I become an NRI for Indian tax purposes?

You become an NRI (Non-Resident Indian) for Income Tax Act purposes when you spend fewer than 182 days in India in a financial year (April 1 to March 31). If you depart India on November 1, the current financial year (April 1 to November 1) has approximately 215 days in India — you are still resident for that year. The year in which you first spend fewer than 182 days is your first NRI year. RNOR status: even after becoming NRI-qualifying by day count, you may be RNOR for up to 2 years if you were a tax resident for 9 of the last 10 years OR present for ≥729 days in the last 7 years but do not meet the full ROR conditions. RNOR tax treatment is more favourable than full resident (no tax on foreign income). Determine your exact residential status for each financial year by checking the day count and the 2-of-10-year / 730-day conditions — this determines whether you are ROR, RNOR, or NRI and what income is Indian-taxable.

How do I withdraw my EPF balance after moving to the USA?

EPF withdrawal process for NRIs: (1) Ensure your UAN (Universal Account Number) is activated via the EPFO portal (epfindia.gov.in). (2) Link your Aadhaar (if held) to your UAN and verify your bank account details in the portal. NRO bank accounts are accepted for EPF credit. (3) Submit Form 19 (Full and Final Settlement) online via UAN Portal → Online Services → Claim (Form 31, 19, 10C, 10D). (4) Your previous Indian employer approves the claim. (5) EPFO processes and credits the balance (net of any TDS) to your linked bank account. TDS: if service < 5 years and amount >₹50,000: 10% TDS (with PAN) or 30% (without PAN). If service ≥5 years: no TDS. Timeline: 3–10 working days for online claims. Pension component (EPS): separately claim via Form 10C — pension is available from age 50 (reduced) or 58 (full) regardless of where you live.

Can I repatriate money from my Indian bank account after moving abroad?

Yes — the process depends on the type of Indian account. NRO account (most common for NRIs receiving Indian income): you can repatriate up to USD 1,000,000 per financial year. You need a CA certificate (Form 15CA and 15CB) from a Chartered Accountant confirming Indian taxes have been paid. Submit via the income tax e-filing portal and your bank. NRE account: fully repatriable — no limit on amount, no CA certificate required. NRE account principal and interest can be sent abroad freely. Resident savings account (converted to NRO): if you had a regular Indian savings account before becoming NRI, it should be converted to an NRO account (your bank will assist). You then follow the NRO repatriation rules above. The USD 1M annual limit is per person — with a spouse who is also an NRI, you have a combined USD 2M annual repatriation capacity. Consult your authorised dealer bank for the specific documentation requirements.

My parents own property in India which I inherit as an NRI — what are the tax implications?

Inherited Indian property by an NRI: no inheritance tax in India (Estate Duty was abolished in 1985). You receive the property free of inheritance tax. However, capital gains implications on eventual sale: the cost base for CGT purposes is the Fair Market Value on the date of inheritance (for properties acquired after April 1, 2001) or the cost to the previous owner (for pre-2001 acquisitions, with indexation). As an NRI selling inherited Indian property: LTCG (held >2 years) at 20% with indexation; buyer withholds 20% TDS. Repatriation: you can repatriate the sale proceeds up to USD 1M per year via NRO account with CA certificate. For inherited property from a deceased parent, additional documentation (succession certificate, legal heir certificate, probate) may be required by the bank and FEMA. FEMA regulations for NRIs are at rbi.org.in — the RBI's Master Circular on Non-Resident Accounts covers all repatriation rules comprehensively.

Disclaimer:This guide provides general tax information for educational purposes only. Indian Income Tax Act residency rules, FEMA repatriation limits, EPF withdrawal procedures, and DTAA provisions change with Union Budgets and RBI/CBDT circulars. Nothing in this guide constitutes tax or legal advice. Consult a qualified Indian Chartered Accountant (ICAI member) before departing India, particularly for FEMA compliance and EPF/PPF strategy.

Keep reading

Moving from India Tax Guide 2026: RNOR Status, FEMA Repatriation & EPF/PPF on Departure

Key Facts

Moving from India to the USA: Key Planning Points

Wise

SafetyWing

Frequently Asked Questions

When exactly do I become an NRI for Indian tax purposes?

How do I withdraw my EPF balance after moving to the USA?

Can I repatriate money from my Indian bank account after moving abroad?

My parents own property in India which I inherit as an NRI — what are the tax implications?

Related Guides

More like this, every two weeks.

Moving from India Tax Guide 2026: RNOR Status, FEMA Repatriation & EPF/PPF on Departure

Key Facts

Moving from India to the USA: Key Planning Points

Wise

SafetyWing

Frequently Asked Questions

When exactly do I become an NRI for Indian tax purposes?

How do I withdraw my EPF balance after moving to the USA?

Can I repatriate money from my Indian bank account after moving abroad?

My parents own property in India which I inherit as an NRI — what are the tax implications?

Related Guides

More like this, every two weeks.

Share This Page