An RNOR account refers to the Resident but Not Ordinarily Resident account. It is a type of bank account offered to individuals who qualify as "non-residents" under the Income Tax Act of India but still maintain their status as "residents" as per the Foreign Exchange Management Act (FEMA) guidelines.
In India, the tax residency status of an individual is determined based on the number of days they have spent in the country during a financial year. Under the FEMA rules, an individual becomes a non-resident if they have stayed outside of India for 182 days or more during a financial year or 60 days or more during a financial year and 365 days or more during the preceding four financial years.
However, for taxation purposes, an individual may still be considered a resident of India if they meet certain conditions under the Income Tax Act. These conditions include being a resident for at least two out of the previous ten years and having stayed in India for at least 730 days in the preceding seven years.
An RNOR account is designed to cater to individuals who fall under this specific tax residency status. It offers certain benefits and privileges similar to non-resident accounts but with some additional flexibility for those who are transitioning from being a resident to a non-resident for tax purposes. The account holder can hold and transact in Indian rupees and freely repatriate funds from the account. However, income earned outside India is not taxable in India for RNOR account holders.
It's important to note that the specific rules and regulations governing RNOR accounts may vary from bank to bank, so please do check with your bank for detailed information and eligibility criteria.
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