Someone spent years abroad. Dubai, Johannesburg, Singapore, London. They built a client base there. Then family circumstances brought them home. They didn't want to walk away from relationships that had taken a decade to build, so they kept serving those clients from India. Video calls, email, shared drives. The clients pay as they always have, into the overseas bank account.
In India they file a return for their rental income or bank interest, tick the "non-resident" box, and don't think about the consulting money at all. Why would they? It never came here.
I understand the logic. It is also, almost always, wrong.
The rule nobody explains
Tax follows the work, not the money.
Income from services is taxed where the services are performed. If you are sitting in Pune or Gurugram doing the work, the income arises in India. It does not matter that the client is in another country, that the invoice is in dollars, or that the payment landed in an account you have held abroad for twenty years.
The Income-tax Act charges income received in India and, separately, income accruing in India. Two limbs, not one. Managing where you get paid answers the first. It does nothing at all about the second.
"But I'm still an NRI"
Residential status is arithmetic, not identity.
Broadly, 182 days or more in India in a financial year makes you a resident for that year. There is no exception for feeling based elsewhere, for holding foreign permanent residence, or for genuinely not knowing how long you will stay. If you have spent most of each year in India since coming back, you have been a resident since the first full year after your return, whatever your returns have said.
Permanent residence abroad does not help either. That is an immigration status. Tax residence in most countries turns on physical presence, and after a few years in India you will usually fail their test while comfortably passing ours.
What about RNOR?
Returning professionals are rightly told about "resident but not ordinarily resident", a transitional status that exempts most foreign income for the first couple of years. It is genuinely useful.
It does not cover this situation. The RNOR exemption carries a carve-out: it does not apply to income from a profession set up in, or a business controlled from, India. Your profession is carried on from India. The one relief you were hoping for is the one written to exclude precisely your case.
It isn't only income tax
This is where it stops being an accounting problem.
Exchange control is usually the largest exposure and the last thing anyone thinks about. Under FEMA you become a resident when you come to India for an uncertain period, from arrival, with no day count involved. Three things follow. Your NRI bank accounts should have been redesignated. Investments or property bought on a non-resident footing may have been made on the wrong basis. And fees earned for work done from India are export proceeds, which a resident is required to bring back.
Then GST. Supplying services from India to overseas clients means registration, and the zero-rating that makes exports tax-free depends on the money actually reaching India. Money that stays abroad puts that in doubt.
And if you are still filing as a tax resident of the other country, you may be paying tax where it is not due while a cessation-of-residence charge quietly builds up there.
The genuinely encouraging part
Almost all of this is fixable, and the cost depends far more on timing than on the amounts involved.
Correcting the current year within its normal deadline costs tax and interest, nothing more. Older years go through an updated-return route carrying a surcharge that steps up as each year ages, until the oldest one drops out of the window altogether. Exchange control contraventions can be compounded, voluntarily, for a fraction of what an adjudicated penalty would be, but that route narrows sharply once an investigation begins.
And the past is not invisible. Immigration records already hold every entry and exit. India receives financial account information automatically from more than a hundred countries. Regularising only from next year while leaving the earlier years untouched tends to raise the question rather than close it.
If this sounds like you
Start with your passport. Count the days, year by year. Everything else follows from that one number.
Then get the position quantified before you decide anything. In my experience people overestimate the income tax and badly underestimate the exchange control side, and they usually find out in the wrong order.
The real mistake is treating the foreign bank account as the starting point. It is not. Start with where you lived, where you worked, and when that changed. Once those facts are mapped year by year, the tax, FEMA and GST consequences become much easier to identify—and, importantly, much easier to fix.
