A client returns to India holding a USD 600,000 portfolio, about Rs 5 crore, with large gains, and may qualify for a transitional residential status for a period. How do you sequence realisations? State the framework and tell the client to confirm current rules.

Realise the gains during the transitional window, selling and rebuying what he wants to keep, so the cost resets to about USD 600,000 before he becomes ordinarily resident. At an illustrative 20%, waiting would expose the USD 350,000 gained abroad to about Rs 58 lakh of Indian tax. Held ten more years, the reset saves about USD 70k. Every step depends on his status and the treatment in both countries, which he must confirm first.

Because which country taxes a gain depends on where you are resident on the day you realise it. A shopkeeper moving to a new town settles his old accounts before the new town's tax collector starts counting. For a limited period after returning, a person may be treated as not ordinarily resident, and foreign gains realised then may fall outside Indian tax; once he is ordinarily resident, worldwide gains are taxable in India. The status, its length and its effect must be confirmed with a tax adviser, but the framework is what the interviewer is testing.

Compare three paths at the illustrative 20%. Sell after the window and the USD 350,000 gain costs about USD 70k, roughly Rs 58 lakh. Hold ten years without resetting, and the portfolio grows to about USD 1,295k, with tax on a gain measured from USD 250,000: about USD 209k at the eventual sale. Reset in the window and the later gain is measured from USD 600,000, so the tax is about USD 139k. The saving, about USD 70k, is exactly the tax on the gain made abroad.

Sequence by certainty. First confirm his status: whether he qualifies, for how long, and from which date. Second, confirm how the country where the assets are held taxes a sale by someone who has left; a tax residency certificateA document from a tax authority confirming a person was resident there for a period, used to claim treaty relief and prove status. and treaty position may matter. Third, realise the largest gains early in the window rather than late, so a delay does not push a sale past the deadline. Keep any positions with losses until after he is ordinarily resident, since losses are worth more when there are Indian-taxable gains to set them against. Last, check that no rule in either country disregards a sale followed by an immediate repurchase.

Close with what does not change. The reset is a tax step, not an investment decision; the portfolio after it should still be judged on whether it suits his life in India, including how much should stay in dollars. And once he is ordinarily resident, his foreign holdings must be disclosed in his Indian return every year, whether or not he sells.