Each Extra US Year As An NRI: What Builds Up In Your File | RebaseNest

✍️ RebaseNest Team · Last updated 14 Jun 2026

·9 min read
nrireturneernorfbarfatcafemadtaalong-stay

Educational only. Not investment, tax, legal, or immigration advice. RebaseNest is not a registered investment adviser under SEBI, SEC, or FCA. Indian tax, FEMA, and DTAA rules change frequently. Verify every threshold and citation with a qualified cross-border CA before acting. Full disclaimer.

Assuming you came to the US on H-1B in your late twenties, stayed past the green-card line, and are now eleven or twelve years in, the question that creeps in is rarely "do I want to go back" in isolation. It is usually "what am I carrying that will need to be sorted, the day I do." This piece is a structural checklist of what compounds in your cross-border file with every additional US year you spend as an NRI. It does not tell you when, or whether, to return. It tries to tell you what builds up in the meantime.

Every legal or regulatory claim below is intended to rely on primary regulator and statutory sources (RBI master directions, CBDT notifications, the Income-tax Act, the Internal Revenue Code, FinCEN regulations, IRS official pages, and India Code statutes); any internal links are supplementary reading. The piece is a structural checklist of issues that commonly arise in cross-border return planning, not a substitute for fact-specific advice.

1. The Indian residency tail keeps rolling

Section 6 of the Income-tax Act, 1961 (full text PDF) determines residential status for any given previous year using day counts. The two carve-outs that matter for most long-stay NRIs are:

  • The 60-day arm of the basic test relaxes to 182 days for an Indian citizen leaving for employment abroad (departure year only).
  • For a visiting Indian citizen or PIO with total Indian-source income above ₹15 lakh, the relaxed threshold is 120 days, not 182.

The deemed-resident rule in Section 6(1A) picks up Indian citizens with Indian-source income above ₹15 lakh who are not liable to tax in any other country or territory by reason of domicile or residence. That phrasing matters: it is not "not tax-resident anywhere," it is the statutory wording.

Eligibility for Resident but Not Ordinarily Resident (RNOR) status under Section 6(6) is the bridge most returnees rely on after return. RNOR can extend across multiple financial years after return, depending on prior residency and presence history. It depends on the prior-ten-years window, so the more years you stay non-resident, the more reliably your RNOR window remains intact when you do return. The point is not to rush home for the window. It is to know the window is a function of the past, not the future.

2. FBAR and FATCA accumulate, year by year

Each calendar year your aggregate foreign-account balance exceeds USD 10,000 at any single point, you have an FBAR filing obligation under 31 USC 5314 and 31 CFR 1010.350. The filing is FinCEN Form 114, e-filed via the BSA E-Filing System. Reference: FinCEN's Report of Foreign Bank and Financial Accounts page.

FATCA reporting on Form 8938 sits under IRC §6038D. Filing thresholds vary by filing status and residence. Reference: IRS About Form 8938.

A practical view of what tends to accumulate over a long stay:

NRE / NRO / FCNR balances        FBAR + Form 8938
PPF / EPF / NPS balances         FBAR + Form 8938
Indian mutual funds              Form 8938 + PFIC analysis (FBAR generally
                                 attaches to the foreign financial account
                                 holding the units, if any)
Indian brokerage demat           FBAR + Form 8938
Indian life insurance with cash  FBAR + Form 8938

Indian mutual funds typically classify as Passive Foreign Investment Companies (PFICs) under IRC §1297. PFIC rules are mechanically painful (Form 8621 per fund) and the cost-basis history compounds across years. Whatever PFIC paperwork was tolerable five years in is meaningfully harder eleven years in. Longer holding periods usually make basis reconstruction more difficult.

3. The basis question: there is no automatic step-up

There is no general step-up in basis under US tax law on becoming a US person. When a US person sells Indian-listed equity, mutual fund units, or RSU stock, the gain is computed from original cost. India taxes the same sale under its own sourcing rules. Relief from double taxation, in the India-US case, flows through Article 25 of the DTAA, read with Section 90 of the Income-tax Act, Rule 128, and Form 67. Form 67 is governed by Rule 128; after CBDT Notification No. 100/2022, it may generally be furnished up to the end of the relevant assessment year if the return is filed under Section 139(1) or 139(4), and by the updated-return filing date for Section 139(8A) returns. Reference: Income-tax e-filing portal for Form 67.

Section 91 of the Income-tax Act is the unilateral non-treaty relief route. It does not apply to the India-US case because an active DTAA exists. Mixing Section 90 and Section 91 in cross-border copy is a credibility error; the operative section is Section 90.

The longer the holding history, the more individual lots there are to track. The "I will figure it out when I sell" stance gets more expensive each year.

4. NRE, NRO, FCNR and the FEMA redesignation event

Under FEMA, a change in residential status is the operational trigger for redesignation of NRE, NRO, and FCNR accounts. The relevant operational guidance sits in the RBI Master Direction on Deposits and Accounts (FED Master Direction No. 14/2015-16). Per RBI guidance, NRE savings accounts are to be redesignated as resident accounts (or transferred to RFC if eligible). NRE term deposits may be allowed to continue till maturity at the contracted rate of interest, subject to redesignation. FCNR(B) deposits may continue till maturity. NRO accounts are redesignated as resident accounts.

A reasonable working table of what each account becomes, on change of residential status, is:

NRE Savings   →  Resident Savings (or RFC if eligible)
NRE Term Dep  →  Redesignated Resident deposit or RFC if eligible;
                 may continue till maturity at contracted interest under
                 RBI rules
NRO Savings   →  Resident Savings
FCNR(B) Dep   →  May continue till maturity, then RFC or resident FD
PIS account   →  Closed, equity moved to resident demat

Specific bank operational practice differs. The Master Direction is the floor; the AD bank's product workflow is the ceiling. Bank implementation can differ by product workflow, but RBI/FEMA rules set the underlying framework.

5. The currency-exposure clock

Every additional US year is another year your effective net worth is denominated mostly in USD, while your eventual cost base (rent, schools, healthcare in any Indian metro) sits in INR. The published RBI Reference Rate Archive is the cleanest reference for converting USD positions at a defensible spot rate, on any given valuation date.

The structural observation is straightforward: a portfolio that is 90% USD-denominated has a higher INR-volatility tail than one that is, say, 60% USD and 40% INR. Whether that tail matters to you is a question of when you expect to spend the money, not a forecast of the rate. The rebalancing decision is yours and your adviser's; the source data is public.

6. US-side thresholds you do not undo by leaving

Two categories build up that do not unwind on departure:

  • Lawful Permanent Resident long-term-resident status: Under IRC §7701(b)(6), an LPR who was a lawful permanent resident in at least 8 of the last 15 taxable years is a long-term resident; expatriation consequences then run through IRC §877A, and an expatriating long-term resident can be a covered expatriate subject to the mark-to-market exit-tax regime. Reference: IRS Expatriation Tax page. Whether this applies is a function of immigration history, net worth, and income, not just years in country.
  • Substantial Presence Test history under IRC §7701(b): even after you leave, the SPT can pull you back into US residency for the part-year of departure, with implications for dual-status filing.

See our US-side year thresholds for long-stay NRIs for the mechanics. The numbers are statutory; the application is a CPA conversation.

7. A short list of what to keep current, regardless of return year

These are document-hygiene items that age badly:

PAN (active, e-portal accessible)
OCI card (renewal cadence per MEA)
Indian bank KYC (AD bank, NRE/NRO/FCNR)
US tax returns + supporting records (retention period varies under IRS rules);
  FBAR account records generally 5 years from the FBAR due date
RSU lot-level cost basis (US broker + India)
Form 67 history (per year of foreign tax claim)
Indian mutual fund SOA history (per scheme)
PPF / EPF / NPS account statements

The article at /blog/returnee-structural-checklist goes deeper on the file you assemble for a return year. The point of keeping these current every year is that the day return becomes urgent (job change, family event, policy shift), the file is already there.

8. What this post is not

This post does not tell you whether to return, when to return, or what your "right" duration in the US is. Those are personal questions, with answers that vary by family, career, and risk preference. To each on their own.

What it does try to be is an honest catalog of what compounds in the cross-border file as the years pass, sourced to RBI, CBDT, IRS, FinCEN, and the underlying statutes. Maintaining records over time generally reduces reconstruction work in a return year.

A note on what this is. This article is one returnee's working notes, not personalised advice. Numbers age. Rules change. The only person who can sign off on your specific case is a qualified cross-border chartered accountant looking at your full facts. Use this as a checklist of questions to take to that conversation, not as the answer.

See also: Disclaimer · Terms of Service · Privacy Policy

Sources:

Reviewed by RebaseNest CA Review Panel — an independent panel checking all tax-related claims against IndiaCode and RBI primary sources.