A foreign national or OCI cardholder who moves to India for work usually becomes resident for Indian tax in the first tax year with 182 days here, and is usually "resident but not ordinarily resident" (RNOR) for the first two or three tax years. Indian salary is taxed from the first payslip, but income that arises and is received abroad is not taxed in India until you become resident and ordinarily resident (ROR), when India taxes your worldwide income.
An OCI card is not citizenship, and for tax it changes little: your days in India decide your status. It matters more for investing, where a few Indian schemes and property rules depend on it, and US or Canadian links bring extra friction with some fund houses. The example below follows a British OCI cardholder who lands in Bengaluru on 1 August 2026, year by year.
When do you become resident for tax in India?
India decides residential status for each tax year, 1 April to 31 March, by counting days, under section 6 of the Income-tax Act, 2025 (which replaced the 1961 Act from 1 April 2026 and kept the same tests). You are resident if you are in India for:
- 182 days or more in the tax year, or
- 60 days or more in the tax year and 365 days or more over the four tax years before it.
An Indian citizen or a person of Indian origin who comes to India on a visit gets a gentler second test: 182 days instead of 60, or 120 if income from Indian sources is above ₹15 lakh, and someone resident only through that 120-day test is RNOR. Whether you count as a person of Indian origin has long turned on whether you, a parent or a grandparent was born in undivided India, not on the card itself, so an OCI card held only through marriage may not qualify. A foreign national of non-Indian origin gets no relaxation, so long visits before the move can make you resident earlier than you expect.
Arrive after about 1 October, with no earlier time in India that year, and you will have fewer than 182 days in that tax year: 1 October to 31 March is exactly 182 days. The part-year is then usually a non-resident year.
Once resident, you are "not ordinarily resident" in a tax year if you were non-resident in nine of the ten tax years before it, or were in India for 729 days or fewer in all over the seven tax years before it. Meet neither and you are ROR. Salary for work done in India is taxed in India whatever your status.
Worked example: Maya's first four tax years in India
Maya is a British citizen with an OCI card through her father, who was born in Mumbai. She has always lived in London, visiting India for about two weeks a year, and lands in Bengaluru on 1 August 2026 to join an Indian employer.
| Tax year | Days in India | Which test she meets | Status |
|---|---|---|---|
| FY 2026-27 | 243 (1 August to 31 March) | Non-resident in all ten earlier years | RNOR |
| FY 2027-28 | 366 | Non-resident in nine of the ten earlier years | RNOR |
| FY 2028-29 | 365 | Non-resident in only eight of ten, but 679 days in the seven earlier years (5 × 14 + 243 + 366) | RNOR |
| FY 2029-30 | 365 | 1,030 days in the seven earlier years (4 × 14 + 243 + 366 + 365): neither test | ROR |
Her Indian salary is taxed from her first payslip. The rent from her London flat and the interest on her UK savings are not taxed in India until 31 March 2029, as long as they are paid into her UK accounts. From 1 April 2029 her worldwide income is taxed in India, with credit for UK tax on the same income under the India-UK tax treaty.
Had she landed on 2 October 2026 instead, FY 2026-27 would have been a non-resident year (181 days, and nowhere near 365 days of earlier visits), followed by two RNOR years, and she would still have been ROR from FY 2029-30.
Bank accounts: FEMA has its own test
Banks and investments follow the Foreign Exchange Management Act (FEMA), which has its own test of residence, based on why you are in India as well as for how long. Someone who has come to India to take up a job, run a business or stay for an uncertain period is generally treated as a person resident in India, whatever their passport, and uses ordinary resident accounts. The test has been read in different ways, so check it if your stay is short or open-ended.
Accounts you already hold abroad can stay open: section 6(4) of FEMA lets a person resident in India keep, use and invest foreign currency, foreign securities and property abroad that were acquired while living outside India, and the income on them.
Banks will ask for your passport and visa or OCI card, proof of your address in India and a PAN, so apply for the PAN early; your employer needs it for salary TDS too. If you work for an employer covered by EPF, you are usually an "international worker" under the EPF Scheme, 2026, contributing on your whole salary rather than up to the wage ceiling, unless a social security agreement between India and your home country exempts you through a certificate of coverage from your home scheme.
What can an OCI cardholder or a foreign national invest in?
Once you are resident in India under FEMA, you invest through resident bank and demat accounts after Indian KYC, like any resident, subject to each fund house's own list of eligible investors. The passport still matters in a few places:
| Investment | OCI cardholder | Foreign national without OCI |
|---|---|---|
| Indian shares, mutual funds, bank deposits | Yes, as a resident while living in India | Yes, as a resident while living in India, subject to each provider's eligibility rules |
| NPS | Yes (OCI cardholders have been eligible since 2019) | No: NPS is for Indian citizens and OCI cardholders |
| Property while living abroad | Same as a non-resident Indian, except agricultural land, plantation property and farmhouses (MHA notification, 4 March 2021) | Different, stricter FEMA rules: check them before you sign anything |
Whichever applies, equity gains are taxed at Indian rates for FY 2026-27: listed shares and equity funds held over 12 months at 12.5% above ₹1.25 lakh a year, and 20% within 12 months; shares listed only abroad are long-term after 24 months, at 12.5%, and otherwise taxed at your slab.
US and Canadian links: FATCA and PFIC
India and the US exchange account information under FATCA, so every Indian bank, fund house and broker asks whether you are a US person. Because of the reporting this brings, some Indian fund houses do not accept money from US persons or residents of Canada, others accept it with extra declarations, and some only through certain platforms or with paperwork done in person. Policies differ between fund houses and change, so check each one's current terms before planning around a fund. A US citizen or green-card holder stays a US person while living in India, so the friction follows you.
US citizens and green-card holders also stay taxable in the US on worldwide income. Under US rules an Indian mutual fund is usually a passive foreign investment company (PFIC), which needs a separate IRS Form 8621 for each fund and can be taxed harshly, so a US person's choice of Indian investments is best worked out with both countries' tax in view.
Tax on your global income once you are ROR
From your first ROR year, India taxes your worldwide income at its own rates: salary for any work done abroad, foreign interest, dividends, rent and capital gains. Under the new regime, the default for FY 2026-27, salary up to ₹12.75 lakh pays no tax and income above ₹24 lakh is taxed at 30%, plus 4% cess.
- Foreign tax credit: tax paid abroad on the same income is credited, up to the Indian tax on it, under the tax treaty with that country. The claim needs Form 44 (which replaced Form 67) within 12 months of the end of the tax year.
- Two residences: if another country also treats you as resident, the treaty's tie-breaker rules decide where you are resident for treaty purposes.
- Foreign assets: every foreign account, share, fund, policy and property goes into Schedule FA of your return each year, for the calendar year, so you file ITR-2 or ITR-3. Leaving one out can cost a ₹10 lakh penalty under the Black Money Act, 2015, not applied since 1 October 2024 where foreign assets other than property total ₹20 lakh or less.
- Retirement accounts abroad: for accounts in the US, the UK or Canada (the department's Form 40 FAQs also list Australia) opened while you were resident there and non-resident in India, section 158 of the Income-tax Act, 2025 lets you be taxed in India when you withdraw instead of as income accrues. You choose on Form 40 by the return due date.
Checklist for the move
Before you move
- Count any earlier days in India by tax year, and pick your arrival date knowing the 182-day line.
- List your foreign accounts and assets with values and dates acquired.
- Check what your home country taxes when you leave, and whether a social security agreement with India covers you; if it does, get the certificate of coverage before you start work.
- If you are a US person, line up US tax advice on PFIC and FATCA before investing in India.
The first 90 days
- Get a PAN if you do not have one, and give it to your employer.
- Open a resident bank account; keep your accounts abroad if you want.
- Check your EPF status as an international worker.
- Line up health cover: a new personal policy usually excludes illness in its first 30 days, accidents aside, and can exclude pre-existing conditions for up to three years (IRDAI's maximum since 1 April 2024). The insurance planning guide sizes the cover.
- Keep foreign income paid into your accounts abroad during your RNOR years.
Each tax year
- Work out your status: non-resident, RNOR or ROR.
- File your return with that status; in your first ROR year add Schedule FA, your foreign income, Form 44 and, for a retirement account abroad, Form 40.
- Pay advance tax if the year's tax after TDS will be ₹10,000 or more.
Planning your own move, or unsure what you can invest in? Ask for a call from a SEBI-registered investment adviser.
Frequently Asked Questions
This is general information, not personalised tax or investment advice. Tax and FEMA rules change; the figures here apply to FY 2026-27. Dhi is not a SEBI-registered investment adviser.
