Tax🇮🇳 Bengaluru, India

Income tax: residency (RNOR), PAN & ITR

India's tax year runs April-March, not January-December. Your tax bill depends entirely on your residency status, and most newcomers land in a transitional bracket called RNOR (Resident but Not Ordinarily Resident) for the first 2-3 years, under which your foreign income is generally NOT taxed in India. You need a PAN (tax ID) before your employer can run payroll; they deduct tax monthly (TDS) and issue Form 16; you then file an annual return (ITR) by 31 July. The new regime is now the default, but you can opt for the old one.

Total cost
PAN ~₹107 (or ~₹1,017 for overseas dispatch); self-filing the ITR is free. Your actual income tax depends on income, regime and residency.
Time needed
PAN in days to a few weeks; residency and filing follow the April-March tax year, with the return due by ~31 July after year-end.
Validity
PAN is lifelong and never needs renewal. Residency status is re-assessed every tax year — RNOR usually lasts only the first 2-3 years before you become Ordinarily Resident and are taxed on worldwide income. An ITR is filed every year.
Verified
June 2026
High confidence·Salaried professionals on an Indian payroll moving to Bengaluru (rules are national, set by India's Income Tax Department).

Before you start

  • Valid passport and Indian employment/work visa plus an Indian residential or employer address
  • A job offer or active payroll with an Indian employer (your TDS and Form 16 flow from them)
  • A rough count of how many days you'll physically be in India this April-March tax year (this decides your residency status)

Step-by-step

  1. 1

    Apply for a PAN (your Indian tax ID)

    A Permanent Account Number is mandatory before salary can be processed, because your employer must report TDS against it. Foreign nationals apply on Form 49AA online via Protean/NSDL or UTIITSL, using your passport for identity and an FRRO certificate or employer address-with-visa letter for proof of address. An e-PAN typically arrives within a few days; the physical card follows in 2-4 weeks.

    OnlineWho: You (employer HR often initiates or assists)e-PAN in a few days; physical card 2-4 weeks~₹107 for an Indian dispatch address; ~₹1,017 if dispatched abroad
  2. 2

    Work out your residency status for the tax year

    You're a Resident if you're in India 182+ days in the April-March tax year, OR 60+ days this year and 365+ days across the four preceding years. If neither holds you're a Non-Resident. Crucially, even once you become Resident you're usually RNOR (Resident but Not Ordinarily Resident) at first — RNOR applies if you were a Non-Resident in 9 of the prior 10 years or were in India 729 days or less over the prior 7 years. Almost every fresh arrival meets this.

    OnlineWho: You (confirm with a tax advisor in year one)Assessed each tax year
  3. 3

    Let your employer deduct TDS and give you Form 16

    Under Section 192 your employer withholds income tax from each paycheck (Tax Deducted at Source) and deposits it against your PAN. Submit Form 12BB with your declared deductions/exemptions and chosen regime so they withhold the right amount. After the tax year ends they issue Form 16, the annual TDS certificate summarising your salary, exemptions and tax paid. You need it to file.

    Via employerWho: Employer (you submit declarations)Monthly TDS; Form 16 issued by ~15 June after year-end
  4. 4

    Choose new vs old tax regime

    The new regime is the default — lower rates with a ₹75,000 standard deduction but almost no other deductions; income up to roughly ₹12 lakh effectively bears no tax thanks to the Section 87A rebate. The old regime keeps a ₹2.5 lakh exemption but lets you claim HRA, 80C investments, home-loan interest and the like. Salaried taxpayers can switch each year when filing; run both numbers.

    OnlineWho: You (declare to employer for TDS, confirm when filing)Elected each tax year
  5. 5

    File your annual ITR

    File your Income Tax Return on the e-filing portal (incometax.gov.in). Most salaried residents with income up to ₹50 lakh use ITR-1 (Sahaj); use ITR-2 if you have foreign assets, capital gains or higher income. Reconcile against Form 16 and your AIS/26AS, pay any shortfall or claim a refund, then e-verify. The usual deadline is 31 July following the tax year.

    OnlineWho: You (or a tax preparer)By ~31 July after the tax year; e-verify within 30 daysFree to self-file; ₹500-5,000 if you use a CA/portal

Documents you’ll need

  • Passport plus valid Indian work visa (identity and address proof for PAN as a foreign national)
  • PAN card / e-PAN (mandatory before payroll and for filing)
  • Form 16 from your employer (annual TDS and salary certificate)
  • Form 26AS / Annual Information Statement (AIS) — your consolidated record of tax credited against your PAN

Things most newcomers don’t know

RNOR status is a multi-year shelter on your foreign income — treat it as a planning window, not a footnote.

While you're RNOR (typically your first 2-3 tax years), income that arises outside India — foreign salary, overseas rent, foreign interest and capital gains — is generally NOT taxable in India; only Indian-source income is. Once you tip into Ordinarily Resident, your worldwide income becomes taxable. Realising foreign gains or bonuses while still RNOR can save materially.

Source: ClearTax — NRI status and taxation

The tax year is April-March, so your first partial year in India may keep you Non-Resident regardless of when you arrive.

Residency is counted per April-March tax year. Arrive after early October and you likely fall short of 182 days for that year, so you stay Non-Resident (foreign income untaxed) and only Indian-source income is taxed — useful when timing a mid-year move.

Source: PwC Worldwide Tax Summaries — India

Get your PAN first — without it, payroll and banking stall and TDS is deducted at a penal flat rate.

A PAN is mandatory for an employer to run TDS under Section 192, and absent a PAN tax can be withheld at a much higher flat rate (20%+). It's also needed to open accounts and file your return, so it's the true first domino.

Source: NRI Information — PAN for foreigners

The new regime is now the default, but the old regime can still win if you rent and invest.

Because the new regime strips out HRA, 80C and home-loan deductions, employees paying significant Bengaluru rent or making tax-saving investments sometimes pay less under the old regime. You can choose each year at filing, so compute both before letting the default decide.

Source: ClearTax — income tax slabs

Common mistakes to avoid

  • Assuming a calendar tax year. India runs April-March; mixing it up corrupts your day-count and residency conclusion.
  • Believing you escape tax everywhere. RNOR shelters foreign income from India, but US citizens and green-card holders must still file a US return on worldwide income — claim the foreign tax credit or FEIE and check the India-US treaty (DTAA).
  • Letting the new regime apply by default without comparing. If you pay high rent or hold 80C investments, silently accepting the default can cost you.
  • Treating TDS as the end of it. Even after your employer withholds tax and gives you Form 16, you still must file an ITR by ~31 July — and you need it to claim any refund or report foreign assets.

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