India has no exit tax — there is no deemed sale of your assets simply for becoming an NRI. What decides your Indian tax position instead is a day-count test recalculated every single financial year, and two changes landing from April 2026 make this a materially different exercise than it was even two years ago. This checklist works through exactly when you become non-resident, what the transitional RNOR window buys you, and the FEMA, banking and reporting steps that actually matter on the way out.
The Three Residential Statuses, and What Each One Taxes
Indian tax residency is decided fresh every financial year (1 April to 31 March) under Section 6 of the Income Tax Act, based purely on physical presence — not citizenship, domicile or intent.
| Status | Test | What India taxes |
|---|---|---|
| Resident and Ordinarily Resident (ROR) | 182+ days in India, or 60+ days plus 365+ days across the prior 4 years, plus 2 of last 10 years resident or 730+ days in last 7 years | Worldwide income; worldwide assets reportable |
| Resident but Not Ordinarily Resident (RNOR) | Meets a residency test above but not the 2-of-10-years or 730-day condition | Indian-source income and Indian-controlled business income only — foreign income exempt |
| Non-Resident (NRI) | Fewer than 182 days in India in the FY, and fails the 60-day combined test | Indian-source income only |
From FY 2026-27, the same tests continue but are renumbered under the Income Tax Bill 2025 — the RNOR test moves to Section 6(13) and the deemed-resident rule to Section 6(7). No day-count thresholds change in the renumbering itself; what changes is a specific rule below.
Two Changes That Land From 1 April 2026
The 120-day RNOR trigger
Under the Income Tax Bill 2025, Indian citizens and PIOs earning more than ₹15 lakh from Indian sources now fall into RNOR status at just 120 days of presence in India, down from 182. This is a direct tightening for exactly the profile of person reading this article — someone moving to Dubai while retaining meaningful Indian income.
Below ₹15 lakh of Indian-source income, the ordinary 182-day and 60-day tests continue to apply unchanged.
The deemed-residency trap
This is the rule most UAE-bound NRIs miss entirely. An Indian citizen earning more than ₹15 lakh from Indian sources who is not liable to tax in any other country can be deemed an Indian tax resident under Section 6(1A) — regardless of how few days they spend in India.
Since the UAE levies no personal income tax on individuals, this provision was written with UAE-based, Saudi-based and similarly zero-tax NRIs specifically in mind. If your Indian-source income (rental, dividends, consulting fees routed through India) clears ₹15 lakh, day-counting alone is not enough to secure NRI status — you need to confirm you are not caught by this deeming rule, typically by holding a genuine UAE Tax Residency Certificate that establishes you as tax resident somewhere.
Our guide to the UAE Tax Residency Certificate covers exactly how that certificate is obtained and why it needs to rest on genuine 183-day presence rather than the weaker 90-day route to hold up under scrutiny.
The RNOR Window: What It Actually Buys You
RNOR is the transitional status that makes leaving India efficient rather than abrupt. While you hold it, foreign-source income is exempt from Indian tax — foreign salary, foreign investment income and repatriated funds sit outside the Indian net, while Indian-source income remains taxable as normal.
The window is not a flat number of years. You remain RNOR as long as you are non-resident in 9 of the preceding 10 financial years, or present in India for 729 days or fewer across the preceding 7 years — whichever test you fail last. For someone leaving India for the first time with no prior period abroad, this commonly works out to two to three years, but it depends on your specific residence history.
The two look-back periods use different windows — 10 years for the “resident in 2 of 10” test, 7 years for the 729-day test — and mixing them up is one of the most common calculation errors. Getting your departure timing right against the financial year boundary can preserve the full window; getting it wrong can shorten it by a year.
Worked Example: The RNOR Window in Practice
An IT professional who has lived and worked in India their entire life relocates to Dubai on 1 August 2026, taking up UAE employment.
- FY 2026-27: Present in India for over 120 days before departure — remains Resident and Ordinarily Resident. Worldwide income for the full year, including the UAE salary earned after arrival, is taxable in India.
- FY 2027-28 onward: Now spends fewer than 60 days a year in India. Having been ROR for decades beforehand, they do not qualify for RNOR — they move straight to full NRI status, since the RNOR relief is designed for people re-establishing residence after a period abroad, not for first-time leavers with a long resident history immediately prior.
This is a common misreading: RNOR primarily benefits returning NRIs, not people leaving India for the first time. A first-time leaver typically moves from ROR straight to NRI, with no RNOR bridge, once their day count drops below the threshold. RNOR becomes relevant for this person only if they later return to India and then leave again — the transitional relief is built around the return journey, not the departure.
India Departure Checklist
- Track your day count precisely from passport stamps and immigration records, not estimates — a day or two can shift your entire status.
- Redesignate your bank accounts. FEMA requires resident savings accounts to convert to NRO or NRE once you become NRI. Penalties for not converting run up to three times the account balance or ₹2 lakh, whichever is higher.
- Check the ₹15 lakh threshold against your total Indian-source income — rent, dividends, consulting fees, director's fees — since it decides whether the 120-day RNOR trigger and the deemed-residency rule apply to you.
- Decide on EPF and PPF. EPF can be withdrawn as an NRI. PPF cannot receive new contributions once you are NRI, though an existing balance matures normally on schedule.
- File Schedule FA correctly while still ROR. Foreign asset and account reporting obligations differ sharply by status — get this wrong in your final resident year and it follows you into scrutiny later.
- Time your departure around the financial year boundary (31 March) where the choice is available, since it can materially affect your day count for that year.
FEMA (which governs your bank accounts and capital movement) and the Income Tax Act (which governs what is taxed) use separate tests and can classify the same person differently in the same year. Treat them as two distinct checklists, not one.
Bank Accounts: NRE vs NRO
| NRE Account | NRO Account | |
|---|---|---|
| Holds | Foreign-earned income remitted to India | Indian-source income — rent, dividends, sale proceeds |
| Repatriation | Fully and freely repatriable | Capped at USD 1 million per financial year, after taxes paid |
| Interest tax | Exempt from Indian tax | Fully taxable, TDS deducted at source |
| Currency held | Rupees, but sourced from foreign earnings | Rupees, from Indian income |
A common and legitimate structuring move: many NRIs first move funds from NRO to NRE (after settling applicable tax), then remit from the NRE account, since NRE remittance carries no separate cap beyond the underlying balance. If you expect to remit more than USD 1 million from an NRO account in a year, that requires specific RBI permission on a case-by-case basis — plan around the standard limit rather than assuming an exception.
What Gets Withheld at Source Once You Are an NRI
TDS runs materially higher for NRIs than for resident taxpayers, and it is deducted on gross income without the deductions a resident could claim — the difference is reclaimed, if at all, only by filing a return.
| Income type | TDS rate |
|---|---|
| Rental income from Indian property | 30% (plus surcharge and cess) |
| Interest on NRO accounts | 30% (plus surcharge and cess) |
| Interest on NRE and FCNR accounts | Exempt from Indian tax entirely |
| Property sale — long-term capital gains | 20% TDS withheld; actual LTCG tax generally 12.5% without indexation |
| Listed equity and equity mutual funds, long-term | 12.5% above ₹1.25 lakh of gains a year |
The rent example is the one that surprises people most: an NRI receiving ₹10 lakh in annual rent has roughly ₹3.12 lakh withheld at source, even though the actual tax liability after standard deduction and any home loan interest may be considerably lower. That gap is only recovered by filing an Indian tax return as an NRI — it is not automatic.
Form 15CA and 15CB are mandatory for most NRI remittances abroad exceeding ₹5 lakh, and banks will not process the transfer without them. Building this into your timeline matters if you are moving a lump sum out around the time you relocate.
The LRS Limit Does Not Apply to You as an NRI
The Liberalised Remittance Scheme — the USD 250,000 annual cap that lets resident Indians send money abroad — is only available to resident individuals under FEMA. The moment you become an NRI, LRS is no longer your channel; you move to the NRE/NRO framework instead, with its own limits described above.
Two nuances worth knowing: RNOR status under the Income Tax Act does not change your FEMA position — if you are still FEMA-resident, you can continue using LRS in that period, since FEMA residency and income tax residency are assessed separately. And if you later return to India permanently, LRS eligibility resumes from day one under FEMA's intention-based test, well before your income tax status catches up — that day-one rule is worth knowing if you are thinking about the return journey, not just the departure.
What Changes on the Dubai Side
This half is simpler. The UAE levies no personal income tax on salary, freelance earnings, dividends, capital gains or inheritance, at any level — our guide to whether Dubai has income tax sets out exactly what is and is not taxed here. What the UAE side requires is proving your residency to the Indian tax authority if the deemed-residency question ever arises — and a residence visa is not that proof.
India sits inside the UAE's double taxation treaty network, and DTAA relief on Indian-source income generally requires a Tax Residency Certificate together with Form 10F, filed with the Indian tax authority alongside your ITR. Build your UAE TRC on genuine 183-day presence rather than the 90-day route, as the linked guide above explains, since the weaker route gets challenged.
If you are moving to set up a business rather than take employment, company formation and your own UAE residence visa typically come first. Our guide to business setup in Dubai covers that route, and the Dubai salary guide and cost of living in Dubai cover what an employment move actually looks like financially once you land. If you are also weighing the UK side of a move, our companion guide to moving to Dubai from the UK covers the FIG regime and UK inheritance tax exposure.
Plan Your Move with Takween Advisory
India's rules changed twice in the past two years, and the group most affected \u2014 higher-earning NRIs based in zero-tax jurisdictions like the UAE \u2014 is exactly the audience this checklist is for. Track your day count carefully, check the \u20b915 lakh threshold against your Indian-source income, redesignate your accounts under FEMA, and hold a genuine UAE Tax Residency Certificate rather than relying on your residence visa as proof of anything. Takween Advisory handles the UAE side of the move: residence and dependant visa services, corporate tax registration and planning. Book a free consultation to map the UAE half of your move — for the Indian side, this reflects the position as published and is general information, not personalised tax advice; confirm your specific position with a CA before relying on it.