(INDIA) — Becoming ROR (resident and ordinarily resident), instead of RNOR (resident but not ordinarily resident), can make your U.S. salary taxable again in India, force a Form 67 filing to claim India–USA DTAA Foreign Tax Credit, and still leave you with U.S. tax returns under U.S. residency rules.
for indian professionals in the United States—on H-1B, L-1, OPT, or employment-based Green Card pathways—visa type often distracts from the real trigger. Indian tax residency status does the heavy lifting. A switch from RNOR to ROR changes what India can tax, what you must disclose, and how much paperwork you must complete on both sides.
RNOR vs ROR: what changes in plain terms
Think of RNOR and ROR like two “coverage plans” in Indian tax law.
RNOR is a limited plan. In many cases, india taxes only:
– income earned in India, and
– income from a business controlled from India.
For many movers, that means: salary earned in the United States after you leave is not taxed in India.
ROR is the full plan. India taxes worldwide income, which commonly includes:
– Indian salary, interest, rent, capital gains, and
– U.S. salary, even if earned after migration and already taxed by the IRS.
Once you are ROR, double taxation becomes possible on the same U.S. wages. The fix is usually DTAA relief, claimed correctly in India.
Tax exposure under RNOR vs ROR
| Residency status | Taxable income in India | DTAA relief needed | Form 67 required | U.S. income reported in India |
|---|---|---|---|---|
| RNOR | India-sourced income (and certain India-controlled business income) | Typically not for U.S. salary | Usually no | Typically no |
| ROR | Worldwide income | Yes, when the same income is taxed in both countries | Yes, for FTC claims | Yes |
Why Form 67 becomes the make-or-break step for ROR
Under the India–USA DTAA, the usual outcome for salary is not “no tax.” It is credit for tax paid in the other country, claimed in the right place.
For many RORs, the flow is:
1. The United States taxes U.S. wages because the work is performed there.
2. India taxes the same wages because ROR brings that salary into India’s worldwide income net.
3. India then allows a Foreign Tax Credit (FTC) against Indian tax, capped at the Indian tax on that income.
4. Form 67 is the standard mechanism used to claim that FTC in India.
Key forms and deadlines
| Form / filing | Purpose | Who files | Where filed |
|---|---|---|---|
| Form 67 | Claim Foreign Tax Credit under DTAA | Indian taxpayers claiming FTC (often ROR) | With the Indian income tax e-filing system (submitted before the ITR, in many cases) |
| Indian ITR + Schedule FA | Report income and disclose foreign assets | Commonly ROR with foreign income/assets | India income tax e-filing |
| Form 1040 | U.S. individual income tax return (often worldwide income if U.S. resident) | Individuals meeting U.S. residency tests | IRS filing system |
| U.S. Substantial Presence Test (SPT) | Determines U.S. tax residency based on days | Many non-citizens in the United States | Used to decide U.S. return status |
Case Study 1: mid-year move, but still ROR in India
Background:
– Migration date: Oct 1, 2025
– Visa: H-1B
– Indian Financial Year: 1 April 2025 – 31 March 2026
– Stayed in India for 220 days during the year
– Resident in India in 2 of the last 10 years
– Stayed in India for over 730 days in the preceding 7 years
– Indian tax status: ROR
Income details (illustrative):
– Indian salary: ₹15,00,000; Indian tax paid: ₹1,80,000
– U.S. salary: USD 72,000; U.S. tax paid: USD 18,000
What ROR changes:
– India taxes the Indian salary (no surprise).
– India also taxes the U.S. salary, because ROR means worldwide income must be reported in the Indian return.
DTAA credit flow (illustrative):
– Indian tax on U.S. income: ₹14,50,000
– U.S. tax paid (converted): ₹15,00,000
– Credit allowed in India: ₹14,50,000 (capped at Indian tax on that income)
Filing obligations by country (Case Study 1 & 2)
| Country | Filing required? | Reason | Relevant forms |
|---|---|---|---|
| India | Yes | ROR → worldwide income, plus foreign asset disclosures | Indian ITR, Schedule FA, Form 67 |
| United States | Yes | U.S. residency rules like SPT may apply | Form 1040 |
✅ U.S. filing obligations continue regardless of Indian residency; SPT and/or green card tests determine U.S. tax return necessity
Case Study 2: frequent travel triggers ROR without a “permanent” move
Background:
– Profession: Technology consultant
– Work: Short-term assignments in the United States
– India stay during FY: 190 days
– Aggregate stay in last 7 years: 900+ days
– Indian tax status: ROR
Income details:
– Indian income: ₹18,00,000 (tax paid ₹2,10,000)
– U.S. income: USD 40,000 (tax paid USD 8,800)
DTAA credit result (illustrative):
– Indian tax on U.S. income: ₹8,50,000
– Credit allowed: ₹7,40,000
– Additional Indian tax payable: ₹1,10,000
The key lesson is mechanical: ROR causes India to pull in the U.S. income, then DTAA credit reduces Indian tax only up to the Indian tax on that slice.
⚠️ DTAA relief via Form 67 is required for ROR when U.S. income is taxed in both countries; missing Form 67 can lead to higher Indian tax and penalties if not properly credited
Dual filing is normal; dual tax is what the DTAA tries to prevent
Dual filing means paperwork in both countries. Double taxation means paying full tax twice on the same income. The India–USA DTAA is built to reduce the second problem, not the first.
An ROR commonly files:
– Indian ITR reporting worldwide income and foreign assets, plus Form 67 for FTC, and
– U.S. Form 1040 when U.S. residency rules apply.
U.S. immigration policy updates that affect financial compliance (2025–2026)
DHS and USCIS changes do not set Indian tax residency. They can still affect day-to-day compliance for Indian professionals who are already juggling India and U.S. filings.
- Mandatory registration proof (effective Apr 11, 2025). DHS has stated that non-citizens 18 and older must carry proof of registration. That compliance mindset often spills into tax recordkeeping too.
- H-1B selection rule (effective Feb 27, 2026). On Dec 23, 2025, DHS announced a final rule shifting H-1B selection toward higher-skilled and higher-paid workers. Many candidates will track status more closely during 2025–2026, which also helps day-count tracking for tax residency.
- Fee hikes and a remittance tax (effective Jan 1, 2026). Under One Big Beautiful Bill (HR-1), DHS implemented inflation-adjusted fee increases. A 1% levy applies to certain money transfers from the United States to India starting Jan 1, 2026. That can add friction for ROR taxpayers sending funds while managing two-country reporting.
Official reference points:
– USCIS H-1B FAQs: https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-1b-specialty-occupations
– IRS India treaty text: https://www.irs.gov/businesses/international-businesses/india-tax-treaty-documents
Practical compliance burdens RORs feel first
Day counts drive residency tests. Miss the count, and your status can change.
Start with a simple habit: keep a single travel log that matches passports, I-94 records, and calendars. That log supports India residency status and helps with U.S. SPT analysis.
Start a unified travel and work log now: track India days, U.S. days, and I-94 dates. Use it to assess RNOR vs ROR status and plan Form 67 timing with your Indian ITR to optimize DTAA credits.
Foreign reporting is another pressure point. ROR filers typically must disclose foreign assets in Schedule FA, which may include U.S. bank accounts and investment holdings.
✅ If you suspect ROR status, start documenting days in India vs abroad now and consult a tax professional to align Form 67 timing with Indian ITR filing
Tax and immigration guidance can be complex and fact-specific; readers should consult qualified tax professionals and immigration attorneys.
This article provides informational context and does not constitute legal or tax advice.
USCIS, DHS, and IRS rules change; verify with official sources before acting.
For many Indian professionals, the single biggest tax switch is RNOR to ROR—so track days now, and treat Feb 27, 2026 as a real planning marker if your U.S. work status is tied to H-1B.
This article explains how Indian tax residency status (ROR vs. RNOR) dictates the taxation of U.S. income. ROR status triggers Indian taxes on global earnings, requiring Form 67 filings to claim DTAA relief. It also highlights 2025–2026 U.S. immigration updates, such as H-1B selection changes and new remittance taxes, which add complexity for professionals managing dual-country compliance and reporting requirements.
