India + US: The NRI Guide
For Indians living in the US (or other countries) — how to invest in both markets, manage cross-border taxation, and plan for a financially secure life across two countries.
What you'll learn
NRE / NRO / FCNR Accounts
As an NRI you need the right bank accounts to invest in India. Each account type serves a different purpose.
- →NRE (Non-Resident External): holds foreign earnings, fully repatriable, tax-free interest in India
- →NRO (Non-Resident Ordinary): holds India income (rent, dividends), repatriation capped at $1M/year, interest taxable in India
- →FCNR (Foreign Currency Non-Resident): FD in foreign currency, no exchange rate risk, fully repatriable
FEMA & RBI Guidelines
The Foreign Exchange Management Act (FEMA) and RBI govern what NRIs can and cannot do with money in India.
- →NRIs can invest in equity, mutual funds, FDs, real estate (residential/commercial — not agricultural land)
- →PIS (Portfolio Investment Scheme) required for stock market investments via NRE/NRO
- →Repatriation of sale proceeds: allowed from NRE account without limit; NRO limited to $1M/year
US: 401(k), Roth IRA, HSA
US tax-advantaged accounts are critical tools for wealth building. Understanding the contribution limits and tax treatment is essential.
- →401(k): pre-tax contributions, employer match, taxed on withdrawal; 2025 limit $23,500
- →Roth IRA: after-tax contributions, tax-free growth and withdrawals; 2025 limit $7,000
- →HSA: triple tax benefit — deductible contributions, tax-free growth, tax-free medical withdrawals
- →After 65, HSA can be used for any expense (taxed like 401k withdrawals)
DTAA (India-US Double Taxation Avoidance Agreement)
The DTAA between India and the US ensures you don't pay full taxes in both countries on the same income.
- →US-sourced income: primarily taxable in the US
- →India-sourced income (rental, dividends, capital gains): primarily taxable in India
- →Foreign Tax Credit (FTC) in both countries to offset taxes already paid abroad
- →Controlled Foreign Corporation (CFC) rules: PFIC rules apply to Indian mutual funds held by US persons
Repatriating Funds to India
Moving money from the US to India and back requires understanding RBI rules, LRS, and tax implications.
- →Liberalised Remittance Scheme (LRS): Indians can remit up to $250,000/year abroad
- →NRI sending money to India: use wire transfer to NRE account, no Indian tax on principal
- →TCS (Tax Collected at Source) on LRS remittances above ₹7 lakh — claim as credit while filing taxes
- →Exchange rate risk: hedge using forward contracts for large transfers
RNOR / ROR Tax Transitions
When an NRI returns to India, their residency status transitions through stages that affect what income is taxable in India.
- →NRI: not ordinarily resident — global income not taxable in India
- →RNOR: transitional status for 2–3 years after return; foreign income still largely exempt
- →ROR (Resident and Ordinarily Resident): global income fully taxable in India
- →Plan financial moves (repatriation, Roth conversions) during RNOR window for maximum tax efficiency