Returning to India: the RNOR window and your foreign life policy
Indian law as at 20 October 2026, Financial Year 2026-27. Section numbers follow the Income-tax Act 1961 unless stated; the Income-tax Act 2025 applies from 1 April 2026 and renumbers them. The residence rules below were checked against the text of sections 5 and 6 of the 2025 Act on incometaxindia.gov.in on 20 October 2026; RNOR is now section 6(13) and deemed residence section 6(7).
PPLI.com is a research publisher. It is not an insurer, an insurance intermediary or a tax adviser, it is not registered with IRDAI or SEBI, and it does not solicit or arrange insurance in India. Nothing on this page is advice on your own return or your own move.
- Buy the policy while non-resident, from money earned abroad; regulation 4(ii) lets you keep it after return.
- A returning NRI who was non-resident in nine of the previous ten years is usually RNOR for two to three years: foreign income earned and received abroad is outside Indian tax, and Schedule FA is not required.
- A withdrawal needed within the horizon is best taken in the RNOR years, paid into a foreign account; money received in India is taxable even for an RNOR.
- The month you land can cost a whole RNOR year: count the days before fixing the date.
The strongest case for a policy belongs to the person who knows they will come back
While you are non-resident, India taxes only your Indian income. Your Dubai salary, your Singapore portfolio and a life policy bought there are outside the Indian net, and so is FEMA: an NRI’s foreign earnings are not a resident’s foreign exchange, so there is no LRS limit, no TCS and no permission to seek. That is the moment to build a structure that will still be lawful and still be useful after you land, because once you are back two doors close. Exchange control stops you taking a new foreign policy without the RBI’s permission, and after the surrender value.">Schedule FA is not required (section 6(6)).">RNOR years income tax reaches everything you own anywhere.
Regulation 4(ii) of the FEMA Insurance Regulations is the hinge. A person resident in India may hold any life policy issued by an insurer outside India that was taken while that person was resident outside India. Build it as an NRI, keep it when you come home. The rest of the page is about timing the build so that the tax rules work with you rather than against you; the exchange-control side is on FEMA, LRS and foreign life insurance.
Resident, RNOR, ordinarily resident: the tests
Under section 6(1) you are resident in a financial year if you spend 182 days or more in India, or 60 days in the year and 365 in the previous four. For an Indian citizen or person of Indian origin with Indian-source income above ₹15 lakh, the 60-day limb becomes 120 days (Explanation 1(b), Finance Act 2020). Section 6(1A) adds a deemed residence: an Indian citizen with Indian-source income above ₹15 lakh who is not liable to tax in any other country by reason of domicile or residence is deemed resident, and under section 6(6)(c) is RNOR. For someone who lived in a country with no personal income tax, that provision deserves a close reading before the move, not after.
Section 6(6) then separates the two kinds of resident. You are resident but not ordinarily resident if you were non-resident in nine of the ten previous years, or spent 729 days or fewer in India in the previous seven, or are deemed resident, or are a citizen or person of Indian origin with income above ₹15 lakh who spent 120 to 181 days in India. In practice, a person who was non-resident for nine of the last ten years is RNOR for two, sometimes three, financial years after returning. The exact count depends on the month you land and your days in India in earlier years; have it computed before you choose a date.
What RNOR gives is in the proviso to section 5(1): income accruing or arising outside India is not included in your total income unless it is derived from a business controlled in, or a profession set up in, India. Two consequences follow for a policy. A partial surrender that is earned and received outside India in an RNOR year can stay outside Indian tax. And an RNOR does not file Schedule FA at all. The point that is most often missed is the second half of the proviso: income received in India is taxable even for an RNOR. The withdrawal has to be paid into a foreign account and stay there.
What to settle before the flight
| When | What | Why |
|---|---|---|
| 24 months before | Count the days. Fix the return date and have a CA compute your residence status for the year of return and the two after it under sections 6(1), 6(1A) and 6(6). | A move in April gives a full year of RNOR; a move in February can waste one. The ₹15 lakh and 120-day limbs can change the answer. |
| 18 months before | Decide the owner. You, a policy under the Married Women’s Property Act, or an offshore trust settled now, while you are non-resident. | A trust settled after return is a different animal for both FEMA and section 164. Nominations under section 39 of the Insurance Act 1938 apply to Indian policies; a foreign policy follows its own law. |
| 12 months before | Buy the policy from a foreign account with money earned abroad. Keep the premium receipts and the bank statements that show the source. | Regulation 4(ii) protects a policy taken while non-resident. The source documents will be asked for by the insurer now and by Schedule FA, or FAST-DS, later. |
| 6 months before | Fund it fully. Any top-up after you become resident is a FEMA question with no published answer. | Premiums paid from Indian income after return are, on practitioner analysis, a breach; see the FEMA page. |
| Landing | Open or keep an RFC account for your foreign currency; keep the policy’s payment account abroad. | A withdrawal in the RNOR years has to be received outside India to stay outside Indian tax. |
| RNOR years | Take any planned partial surrender now, abroad, with a written opinion on the proviso to section 5(1). No Schedule FA. | Once you are ordinarily resident, the same withdrawal is taxed at slab rate on the gain under section 56(2)(xiii). |
| Ordinarily resident | List the policy every year in Schedule FA with its surrender value. Tax only when money comes out; the death benefit stays exempt. | CRS has reported the policy to India since 2017. If a year was missed, FAST-DS is open until 31 December 2026. |
What the policy then does for the next thirty years is set out on how India taxes a foreign life insurance policy: deferral while it grows, slab rate on the gain if surrendered in life, exemption on death under the eighth proviso to ULIP) or Rs 5 lakh (other policies) of annual premium; death benefits stay exempt.">section 10(10D). If a Schedule FA year was missed after an earlier return, the disclosure window is explained on FAST-DS 2026.
Host countries that strengthen the case, and those that complicate it
The UAE
No personal income tax. Corporate tax at 9% applies only to business income above AED 3,75,000, and personal investment income is outside it (Cabinet Decision 49/2023, lightly checked); no inheritance tax; DIFC wills for non-Muslims. There is no tax to defer while you live there, so a policy bought in Dubai is about the return to India, succession and protection, not UAE tax. Section 6(1A) deserves attention for a UAE resident with Indian income above ₹15 lakh.
Singapore
No estate duty since 15 February 2008, no capital gains tax, and insurance payouts to individuals are not taxable on IRAS’s published guidance. Again, nothing to defer locally; the policy’s meaning is the move home. Singapore is the most common issuing jurisdiction for Indian families, with a treaty with India and MAS regulation; our Singapore edition covers the return route in detail: returning to India from Singapore with a foreign life policy.
The United Kingdom
The remittance basis ended on 6 April 2025; arrivals who were non-resident for ten years get a four-year FIG regime, and inheritance tax is now residence-based: ten of the previous twenty tax years in the UK brings the worldwide estate into scope, with a tail of three to ten years after leaving (KPMG UK summary). A UK resident’s foreign policy falls under the chargeable-event regime, which we have not verified in detail, so nothing on this page claims deferral for a UK resident. Leave the UK with that tail computed.
The United States
A US person’s policy has to satisfy IRC section 7702, the underlying funds carry PFIC risk, premiums to a foreign life insurer bear a 1% federal excise tax (section 4371), and the cash value is reported on Form 8938 and the FBAR. A family returning from New York should start with a US adviser, not with this page.
Questions returning NRIs ask about the window
How long does RNOR status last after returning to India?
Does an RNOR pay Indian tax on foreign income?
Can I keep a foreign life policy after returning to India?
Can I buy the policy after I move back?
Should I withdraw from the policy in the RNOR years?
Does the deemed-residence rule affect NRIs in Dubai?
What if I already returned and never reported the policy?
Sources and authorities
- Income-tax Act 1961: sections 5(1) and its proviso, 6(1), 6(1A), 6(6), 10(10D), 56(2)(xiii), 164; Income Tax Department NRI FAQ.
- FEMA 12(R)/2015-RB, regulation 4 and 4(ii); RBI Master Direction No. 9/2015-16 (Insurance); Insurance Act 1938, section 39; Married Women’s Property Act 1874, section 6.
- Black Money Act 2015; Schedule FA; FAST-DS Rules 2026 (G.S.R. 732E of 14 August 2026) via KPMG and ClearTax summaries.
- UAE: u.ae on taxation; Cabinet Decision 49/2023 (lightly checked). Singapore: IRAS: estate duty; IRAS guidance on insurance payouts.
- United Kingdom: gov.uk: long-term UK residents; KPMG UK summary of the FIG regime; IHTA 1984 section 6A (legislation.gov.uk). United States: IRC section 7702, section 4371; Form 8938 instructions.
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