Moving Back to India from the US: Tax on Your Stocks, RSUs and 401(k)

Your status is decided separately for each Indian financial year (April–March), in two steps.

Step 1: Are you resident? You are resident in a year if you were in India for either:

• 182 days or more in that year, or
• 60 days or more in that year and 365 days or more in the four years before it.

The 60-day test is replaced by a longer one for Indian citizens and people of Indian origin who are only visiting India. Someone who has moved back for good is not visiting, so in the year you return the date you land matters.

Step 2: Are you "ordinarily" resident? A resident is RNOR (not ordinarily resident) if either is true:

• you were non-resident in 9 of the 10 years before this one, or
• you were in India for 729 days or less in total in the 7 years before this one.

Otherwise you are ROR (resident and ordinarily resident) and taxed on your worldwide income. Because the tests look back over several years, someone who lived abroad for 9 years or more usually gets two RNOR years, sometimes three.

While you are RNOR, India taxes only income that arises in India, is received in India, or comes from a business controlled in India or a profession set up in India. A gain on US shares sold through your US broker, with the money staying in that account, is foreign income received outside India, so India doesn't tax it. The same goes for US dividends paid into that account.

Once you are ROR, every sale is taxed in India, and the gain is measured from what you originally paid, converted at the SBI TT buying rate (the common practice: cost at the purchase-month rate, sale value at the rate for the month before the sale; have your CA confirm the method). Shares held more than 24 months give long-term gains at 12.5% plus 4% cess; shorter holdings are taxed at your slab rate. So a gain that built up over years in the US becomes taxable in India if you sell after your RNOR years.

Use the calculator to run your own numbers once you are ROR; it applies the 24-month test, the 12.5% rate and cess.

When RSUs vest, their value is salary. For RSUs earned by working in India, that salary is taxed in India whatever your status, through your employer's TDS.

RSUs granted while you worked in the US often vest after you move. Part of that vest can relate to US work, and the US may tax that part. Splitting one vest between the two countries is a common source of double tax, so have it reviewed, and keep your vesting schedule and travel dates.

After vesting, the shares are like any other US shares (section 3), with the vest-date value as your cost. See the RSU and ESPP guide for how vests and sales are taxed in India.

While you are RNOR, growth in your 401(k) and withdrawals paid into a US account are foreign income received outside India, so India doesn't tax them. The US still taxes withdrawals under its own rules.

Once you are ROR, India could tax the growth inside the account each year, while the US taxes it only when you withdraw. Section 89A (section 158 of the Income-tax Act, 2025) fixes that mismatch: you can choose to be taxed in India in the year the US taxes the income, usually when you withdraw. The US is a notified country (CBDT Notification 25/2022).

• Who qualifies: you opened the account while you were non-resident in India and living in the US.
• How: file Form 10-EE online before the due date of your income tax return. From tax year 2026-27 it is Form 40 under the Income-tax Rules, 2026. Miss it and that year's relief is lost.
• It's permanent: once chosen, it applies to every later year and can't be withdrawn.
• Still report it: the 401(k) goes in Schedule FA once you are ROR.

The choice interacts with US tax and foreign tax credit. With a large balance, decide it with a CA who handles returning NRIs.

• Keeping the shares is legal. Under FEMA section 6(4), a resident of India may hold, own, transfer and keep investing in foreign shares acquired while living abroad. You don't need to sell them before you move.
• Tell your broker you've moved. Update your address and residency. Some US brokers limit accounts for people living outside the US, so check their policy before you leave.
• File a W-8BEN once you are no longer a US tax resident. US dividends to non-residents are taxed at 30%, or the treaty rate with a W-8BEN (25% for India). Once you are ROR, India gives credit for the US tax through Form 67 (Form 44 from tax year 2026-27), up to the treaty rate and no more than the Indian tax on that dividend. Tax withheld above 25% is not credited, so file the W-8BEN.
• US tax on gains: a non-resident without a US tax home who spends fewer than 183 days in the US is generally not taxed by the US on stock gains. The year you leave is usually a part-year (dual-status) year in the US, so time any big sales with a US tax adviser.

Schedule FA (foreign assets) is filed only by ROR residents. Non-residents and RNORs don't file it. In your first ROR year, report everything you hold abroad, including shares, brokerage accounts and your 401(k), even though you bought them while living in the US. Schedule FA follows the calendar year, not April–March.

Section numbers changed on 1 April 2026. The Income-tax Act, 2025 replaced the 1961 Act from tax year 2026-27. The rules above didn't change, but their numbers did: