Seafarer Coming Ashore for Good: Your Status in the Year of Return, the RNOR Years, and What to Do with Your Accounts

A seafarer who comes ashore for good — a shore job, a family business, retirement — leaves a tax and banking setup built for someone who is never home. Three things change, and not on the same day:

1. Tax status changes by financial year, on days in India.
2. FEMA status changes on the day you return with the intention to stay.
3. Accounts must follow FEMA, but tax-free interest follows tax status.

Planned a few months ahead, the transition can give you one or two years in which foreign income still is not taxed in India. Unplanned, the year of return can be fully taxable before the last wages have arrived.

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The year of return: which test applies

The relaxed 182-day line that keeps a seafarer non-resident applies to a citizen who leaves India in that tax year for employment abroad, or as crew of an Indian ship, and to a citizen who comes on a visit. Coming home for good is not a visit. So the test for the year of return depends on when your last contract began.

Last contract began in the same financial year. You left India that year for employment, so the 182-day line still applies. Whether you are non-resident depends on when you sign off.

	Example A	Example B
Last contract (passport)	20 Apr – 5 Nov 2026	1 Jun – 10 Oct 2026
Days outside India	198	130
Days in India, FY 2026-27	167	235
Status for FY 2026-27	Non-resident	Resident

Last contract began in the previous financial year. Say you signed on in January 2026 and came home for good in June 2026. In FY 2026-27 you did not leave India for employment, and you did not come on a visit. The ordinary test can apply: 60 days in the year plus 365 days in the four preceding years — which almost every seafarer has, from leave between contracts. Expect to be resident for that year.

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The not-ordinarily-resident years

Once you are resident, you are either ordinarily resident (taxed on worldwide income) or not ordinarily resident — RNOR. You are RNOR in a year if, in the years before it, you were:

• non-resident in nine of the ten preceding years, or
• in India for 729 days or less in the seven preceding years.

A seafarer usually spends a few months at home every year, so the 729-day test rarely helps. The nine-of-ten test does the work. After a long career at sea, it typically gives:

Year after coming ashore	Non-resident years in the preceding ten	Status
First resident year	10	RNOR
Second resident year	9	RNOR
Third resident year	8	Resident and ordinarily resident

What RNOR does: income that arises and is received outside India stays outside Indian tax, unless it comes from a business controlled in India or a profession set up in India. Indian income, and income received in India, is taxed. FCNR interest stays exempt. You do not have to report foreign assets in Schedule FA.

If Example A’s seafarer is non-resident in FY 2026-27, the RNOR window starts a year later — FY 2027-28 and 2028-29 — so the timing of the last sign-off shifts the whole window.

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The final wages

CBDT Circular 13/2017 — the reason ship salary credited to an NRE account is not taxed — is written for non-residents. A resident, even a not-ordinarily-resident one, is taxed on income received in India.

So if the year of your last contract turns out to be a resident year, wages for that contract that are credited to an Indian account need examining before the return is filed. Where the year will be resident, discuss with us where the final wages should be paid before you sign off.

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The accounts: what changes, and when

RBI’s instructions require NRE accounts to be redesignated as resident accounts, or their funds moved to a Resident Foreign Currency (RFC) account, immediately on your return to India to stay. Short visits never triggered this; coming home for good does.

Account	On coming ashore for good
NRE savings and deposits	Redesignate as resident, or move to RFC
NRO	Becomes a resident account
FCNR (B) deposits	May run to maturity; then resident or RFC
Bank accounts abroad	You may keep them (FEMA permits assets acquired while non-resident)
Demat, mutual funds, insurance	Update KYC to resident

Tax on the interest:

• NRE interest is exempt only while FEMA treats you as resident outside India. Once the account must be redesignated, its interest is taxable like any other.
• FCNR interest is exempt for a non-resident and for an RNOR. Deposits maturing inside your RNOR years earn tax-free interest to the end; a five-year deposit opened just before you come ashore will not.
• RFC accounts let you hold foreign currency brought back to India. Treat the interest as taxable unless we confirm otherwise for your status.

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When you become ordinarily resident

From your first ordinarily resident year:

• worldwide income is taxable in India — interest on foreign accounts, foreign rent, gains on foreign shares;
• Schedule FA in your return must list your foreign bank accounts and assets. Leaving it out invites penalties under the Black Money Act, and these are not small;
• foreign tax credit for any tax paid abroad is claimed in Form 67, filed before the return.

Close or consolidate the foreign accounts you do not need before that year arrives.

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A checklist for the last contract

1. Before accepting the last contract: run the count for the year of return; decide which year should be the first resident one.
2. Before signing off: decide where the final wages are paid; let FCNR deposits run to dates inside the RNOR window.
3. On returning to stay: redesignate NRE accounts (or move funds to RFC); convert NRO; update KYC everywhere.
4. First return as resident: claim RNOR status correctly; report Indian income; keep the day counts and the history of non-resident years on file.
5. Before the first ordinarily resident year: prepare Schedule FA and decide which foreign accounts to keep.

We plan this with seafarers on our annual plan a year before they come ashore, and work it through with anyone who comes to us at the point of return.

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Frequently Asked Questions

What is a seafarer’s residential status in the year they come ashore for good?

It depends on when the last contract began. If you left India for that contract in the same financial year, the 182-day line applies and you may still be non-resident if you sign off late enough in the year. If the contract began in the previous year, the ordinary test of 60 days in the year plus 365 days in the four preceding years can apply, and most returning seafarers are then resident.

How many years of RNOR status does a returning seafarer get?

Usually two. You are not ordinarily resident in a year if you were non-resident in nine of the ten preceding years, or in India for 729 days or less in the seven preceding years. Seafarers spend enough time at home to fail the 729-day test, so the nine-of-ten test decides — which after a long career at sea typically covers the first two resident years.

Is ship salary taxable for an RNOR?

Salary that arises and is received outside India is not taxable for a not-ordinarily-resident person. But an RNOR is taxed on income received in India, and CBDT Circular 13/2017 on NRE credits is written for non-residents — so wages for a final contract credited to an Indian account in a resident year need examining.

What happens to NRE and FCNR accounts when a seafarer returns to India?

NRE accounts must be redesignated as resident accounts, or their funds moved to a Resident Foreign Currency account, immediately on returning to stay. FCNR deposits may run to maturity, and their interest stays tax-free while you are non-resident or not ordinarily resident.

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Related reading

• Income tax for seafarers: NRI status, the 182-day rule and CDC dates
• FEMA for seafarers: NRE, NRO and FCNR accounts
• Income-tax notice questioning a seafarer’s NRI status
• Seafarer NRI days calculator
• NRI ITR filing: residential status, DTAA and Schedule FA