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A person who qualifies as a resident but doesn't fulfill the criteria for an ordinary resident comes under the RNOR status. Basically, it applies to people who are returning to India after a long time or those who have recently moved to India.
As per tax perspective, the RNOR status is quite crucial for the NRIs returning from abroad. This status helps them to reorganize their financial arrangements from overseas, and this period can serve as a transition phase for them.
An individual can maintain the RNOR status for up to three fiscal years after coming back to India, based on their previous NRI tenure and by fulfilling specific eligibility criteria.
One thing that people often misunderstand is that you don't need to apply for an RNOR status; you will be automatically qualified for it provided that you fulfill the stay and residential requirements. The key condition that needs to be fulfilled is that, firstly, you need to be an NRI Indian for 9 out of the previous 10 financial years, and secondly, your total stay in India must not exceed 729 days during the past 7 financial years.
I went through this recently when I moved back from the USA. The RNOR status was a lifesaver for me because I was still getting some income from the USA in the form of rent and dividends, because of the assets that I own in the USA. I was so relieved to know that I don't have to pay taxes on the income that I am getting from this because I have the RNOR status.
RNOR (Resident but not ordinarily Resident) status is basically a chance using which a person can get tax benefits that a regular resident can't have.
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