Tax and cross-border planning

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← 4. Succession & Governance6. Reporting & Operations →

← 4. Succession & Governance6. Reporting & Operations →

RNOR status, for a returning family member

A person qualifies as Resident but Not Ordinarily Resident (RNOR) if they've been a non-resident in 9 of the preceding 10 years, or present in India for under 730 days across the preceding 7 years. RNOR status can be held for up to 3 financial years after return, during which foreign-sourced income stays outside Indian tax, only India-sourced income is taxed. This is a genuine, time-limited planning window, and it has to be sequenced before the return happens, since the years that determine eligibility are already fixed by the time someone is back.

LRS, for capital moving out

Resident individuals can remit up to USD 250,000 per financial year under the RBI's Liberalised Remittance Scheme; NRIs are not eligible for LRS at all, since it applies only to resident accounts. Tax Collected at Source (TCS) doesn't apply on the first ₹10 lakh of LRS remittances in a year; beyond that, most purposes attract 20% TCS, with narrower carve-outs (2%) for education, medical treatment, and overseas tour packages. This matters directly for a family office funding an overseas trust, education, or investment from India.

DTAA, for families resident in more than one place

Double Taxation Avoidance Agreements between India and the GCC states, and separately with the US, determine which country taxes what when a family member (or the family's income) has a genuine connection to more than one. Getting the residency and source characterisation right at the planning stage is materially cheaper than resolving a double-taxation dispute after the fact.

This is the same cross-border discipline behind our Private Clients & NRIs practice: India, GCC, and US filings run on one calendar, so nothing falls through the gap between two advisers who don't talk to each other.

Talk to us about your family office.

care@clairvoyis.com

Sequencing, worked through

Someone planning to return to India within the next financial year, and expecting to lose RNOR eligibility, should plan any large foreign-asset liquidation or trust distribution before the residency clock resets, not after: a transaction done while still non-resident, or within the RNOR window, can fall outside Indian tax entirely, while the same transaction done a year later, once ordinarily resident, is fully taxable in India. We build this sequencing into the return-to-India timeline itself, not as an afterthought once the person has already relocated.

Common questions

Does LRS apply to remittances from a family trust, or only individuals?

LRS is an individual scheme; a trust or company remitting funds abroad does so under different RBI regulations (typically ODI (Overseas Direct Investment) rules, if the remittance is for an investment), not LRS, which is why we treat individual and entity-level cross-border movement as two separate compliance tracks rather than one.

Can DTAA relief be claimed automatically, or does it need to be applied for?

It has to be claimed (typically via a Tax Residency Certificate from the other country plus Form 10F filed in India) it isn't applied automatically just because a DTAA exists between the two countries.

Talk to us about your family office.

care@clairvoyis.com

The two corridors, and the return sequence

For families with genuine ties to the Gulf specifically, see our India-Gulf corridor guide (DIFC/ADGM vehicles, UAE residency and corporate tax, and the India-UAE DTAA. For families with US citizenship or residency in the picture, the rules are structurally different (citizenship-based taxation changes almost everything downstream)) see our India-USA corridor guide. And for anyone actually moving back to India, the full sequence (RNOR window, remittance timing, and asset disclosure) is on our Returning to India guide.