Best month to R2I

[kallu]

I came to US in Aug 2002 and am planning to R2I in 2008 but wanted to decide which month would be best.

What is the best time of year to return to India to maximize RNOR period and possibly minimize tax in US and India :-D

[RRK]

Oct-Dec is the best time to return to get 1 more year of NRI + 2 years of RNOR.

The best way to min the taxes in India and US, is minimize the income and capital gains.:emsmilep:

To get RNOR, you need to be out of India for 7 years out of 9 years. I dont think you will be eligible.

[LoveIndia]

RRK - Unfortunately most people cannot return during Oct-Nov as kids school start in June in India. If we return in April or May, do you see any disadvantage? I am willing to forego the RNOR period exemption for 1 year. Let's say that I return in April 2008 and am eligible for 7 to 9 year rule. Will my RNOR will be for 2008 and 2009 or only for 2008 alone?

[RRK]

Every year you check if you are 7 years out of previous 9 years. It is actually 730 days. If you complete 9 years outside, you will get 2 years of RNOR.

There is a RNOR calculator available in this forum. Pls do search to find the excel sheet and enter your dates.

[RAJESH H DHRUVA]

Dear RRK,
1. While return in October / December will take care of stay in the Financial Year not exceeding 181 days, the second condition of stay of 60 days in the Financial Year of return wedded to stay of 365 days also needs to be examined.
.02 Thus if the returnee NRI's stay in India in the Financial Year of return does not exceed 181 days but stay pf it does exceed 59 days coupled with
2. This is important as after return both conditions will apply unlike the case of an NRI visiting India wherein sole criteria of stay exceeding 181 days only will apply.

Best wishes.
RAJESH H DHRUVA

[kallu]

Thanks RRK. [quote] To get RNOR, you need to be out of India for 7 years out of 9 years. I dont think you will be eligible. [/quote] Does this mean GOI would treat my 401k distributions as income :-( . If that is true, maybe, 401k doesn't make sense for people in my boat. I was hoping to take out my401k over the period of 2 years as me

[Kannan]

Hi Rajesh

Thanks for your input.

So if a NRI return on December, he will satisfy the 180 days scenario and also 60 days (Jan,Feb,March) ?? So what will be the issue ..Am i missing something here??

Kannan

[RAJESH H DHRUVA]

Dear Kanan,
1. If an NRI returns in December , the stay in India will be less than 181 days .
2. However as a person residing in India , he will be hit by second condition of stay exceeding 59 days in year of return IF his stay in immediate 4 preceding years exceeds 365 days.
3. Presuming he returns in December and his stay in earlier 4 years totals to 365 days or more he will be covered by the definition of Resident under the Income Tax Act.
.02 Now IF he has been a Non Resident in 9 out of 10 years preceding the year of return
OR
if his stay in preceding 7 years doesn't total to 730 days or more
THAN he will be a Not Ordinarily Resident i.e. R but NOR .
4. So long as a person is Non Resident OR RbutNOR his global income and interest earned on RFC and / or continued FCNR accounts is exempt fro tax in India.

Best wishes.
RAJESH H DHRUVA

[kallu]

RRK, I did the worksheet on old msn forums:

http://www.msnusers.com/R2INRIFinanceAndInvestments/Documents/Members%20doc%2FRNOR%20Status%20Calc%20v2.xls

If I return on/after Nov 1, 2008, I am getting up to 3 years of RNOR.

I think I will be OK - I can get my 401k over 3 years and dont have to pay tax to GOI :emsmiled:

Thanks.

Thanks RRK. Does this mean GOI would treat my 401k distributions as income :-( . If that is true, maybe, 401k doesn't make sense for people in my boat. I was hoping to take out my401k over the period of 2 years as me

[indian]

#9,
kallu,

If you return in 2008 , even after Nov 1, you will not have completed 7 out of last 9 years. So you won't get a single year of RNOR. You will be resident as soon as you land in India.

However, what you say holds true, if you return on Nov 1 2009.