An NRI returning to India faces key tax and banking decisions. Salam Pappinissery, CEO of Yab Legal Group and founder of Global Pravasi Association, explains seven essential rules covering FEMA residency, RNOR benefits, UAE earnings, overseas assets, and Indian bank accounts.
DUBAI: An NRI return to India affects overseas finances, but residency tests differ. In a conversation with The Brew News, Managing Editor Shaneer N Siddiqui asked Salam Pappinissery, CEO of Yab Legal Group and founder of Global Pravasi Association, seven key questions for the publication’s readers, particularly UAE expatriates planning to settle in India.
The Brew News: Does moving home permanently change FEMA residency immediately, and how is that different from tax status?
Salam Pappinissery: RBI guidance considers returning for employment, business or indefinite settlement. However, a 2025 FEMA tribunal ruling emphasised the preceding-year requirement of more than 182 days, complicating certain transactions.
Example: A November returnee should notify their bank and seek advice before restricted property purchases.
The Brew News: How many days must a returning expatriate spend in India before becoming tax-resident?
Salam Pappinissery: Generally, residency arises after 182 days in the tax year, or 60 days plus 365 across four earlier years. Qualifying high-income visitors face a 120-day alternative; certain citizens earning over ₹15 lakh in Indian income may be deemed RNOR if not liable to tax elsewhere.
Example: Someone arriving November 1 without earlier visits has 151 days through March 31 and may remain a non-resident unless deemed residency applies.
The 60-day alternative becomes 182 days for Indian citizens who left India for work abroad, and for citizens visiting India. The 120-day rule also needs two conditions: Indian income above ₹15 lakh, and 365 days in the preceding four years. example is correct: arriving on 1 November gives 151 days to 31 March.
The Brew News: How does RNOR (Resident but Not Ordinarily Resident) protect an NRI returning to India and their earnings from Dubai?
Salam Pappinissery: RNOR applies to qualifying residents who were non-resident in nine of the ten preceding years or spent at most 729 Indian days across seven. Duration varies. Foreign income earned and first received abroad is generally excluded, except income from India-controlled businesses or professions.
Example: Dubai deposit interest may remain outside Indian tax during RNOR.
The Brew News: What happens to UAE salary, gratuity and savings if transferred after relocation?
Transferring accumulated, previously received savings creates no new income. Salary for work performed in India is taxable there under domestic law, subject to applicable treaty relief, even if paid in dirhams. Gratuity depends on source, accrual, first receipt, and exemptions.
Example: A Dubai gratuity credited abroad and later remitted differs from one first received in India.
The Brew News: Must NRE, NRO and FCNR(B) accounts change, and is their interest exempt?
Salam Pappinissery: Inform banks promptly. NRE accounts become resident accounts or funds move to eligible RFC accounts; NRO accounts are redesignated. FCNR(B) deposits may run until maturity. NRE interest relief hinges on FEMA status or RBI permission; FCNR(B) has separate NR/RNOR relief.
Example: RNOR alone does not permit indefinite NRE use.
The Brew News: Can returning families keep Dubai property, shares and bank accounts without immediate taxation?
Assets acquired while FEMA-non-resident can generally be retained. Tax is separate: ROR taxpayers normally report overseas assets in Schedule FA; NR/RNOR taxpayers generally need not.
Example: Dubai rental income received abroad may escape Indian tax during RNOR but becomes potentially taxable after ROR begins.
The Brew News: Does the India–UAE treaty eliminate Indian tax, and what records should families preserve?
Salam Pappinissery: No blanket exemption exists. Relief depends on treaty residence, the type of income, and where the work is done, with employment income generally taxed where the work is performed. Treaty benefits normally require a UAE tax residency certificate, and the UAE Ministry of Finance applies its own residency criteria (commonly 183 days in 12 months, with alternative tests). A person who left the UAE mid-year may not qualify, so check the current rules and the treaty text before relying on them. Keep travel records, payslips, bank statements, proof of how overseas assets were funded, and UAE residence documents.
Impact to expect
An NRI return to India requires early checks to avoid banking complications, unexpected tax exposure, and property mistakes. Travel history, income sources, and the date of first receipt all matter. An NRI return to India warrants individual cross-border advice before major transfers or investments.
