Overseas Citizen of India (OCI): Meaning, Types, Eligibility and Benefits

The Indian diaspora worldwide has long demanded Dual Citizenship. The Overseas Citizenship of India (OCI) Scheme was launched in 2006 during the Pravasi Bharatiya Divas at Hyderabad after the Citizenship Act 1955 was amended in August 2005.

OCI shouldn't be misinterpreted as dual citizenship as it doesn't provide political rights. Registered Overseas Citizens of India are not entitled to the rights conferred on a citizen of India under Article 16 of the Constitution with regard to equality of opportunity in matters of public employment. No person who or either of whose parents or grandparents or great grandparents is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may, by notification in the Official Gazette, specify, shall be eligible for registration as an Overseas Citizen of India Cardholder.

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Who is an OCI?

An Overseas Citizen of India (OCI) is a person of Indian origin who is a citizen of another country registered as an OCI cardholder under 7A of the Citizenship Act of 1955. The Government of India introduced this card in 2005 to offer foreign citizens of Indian origin the option to live and work in India indefinitely.

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Eligibility criteria for OCI status

As per section 7A of The Citizenship Act, 1955 (57 of 1955), the following categories of foreign nationals are eligible for registration as Overseas Citizen of India (OCI) Cardholders:-

Any person of full age and capacity: - some text
- who is a citizen of another country, but was a citizen of India at the time of, or at any time after the commencement of the Constitution i.e. 26.01.1950; or
- who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the Constitution i.e. on 26.01.1950; or
- who is a citizen of another country, but belonged to a territory that became part of India after 15.08.1947; or
- who is a child or a grandchild or a great-grandchild of such a citizen; or
A person, who is a minor child of a person mentioned in (a) above; or
A person, who is a minor child, and whose both parents are citizens of India or one of the parents is a citizen of India; or
Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A of the Citizenship Act, 1955 and whose marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the presentation of the application.

Such spouses shall be subjected to prior security clearance by a competent authority in India.

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How to determine your OCI status

To determine OCI status, you should look at the eligibility criteria laid down by the Government of India. If you meet any criteria based on ancestry, citizenship, or marital ties, you can apply for an OCI Card.

Link Button Apply for OCI Card

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To determine your OCI card application status, you can visit the official OCI website. You can check the status by entering your passport and file reference numbers. OCI card application

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What are the types of OCIs?

The Government of India merged the Person of Indian Origin (PIO) card scheme with the Overseas Citizen of India (OCI) card scheme on January 9, 2015. There is no official classification of OCI card holders. Only one type of OCI card exists, but individuals may differ based on how they qualify: PIO OCI and NON-PIO OCI.

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PIO OCI: These are people who obtained OCI status due to their Indian ancestry. They may also have held PIO cards, which are now obsolete.
NON-PIO OCI: These people obtained OCI status by marrying an Indian citizen or an OCI cardholder.

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Taxation rules for OCIs

Any income earned by an OCI in India is subject to taxation. This includes income earned through working in India or providing services in India. The tax implications for OCIs depend on their residential status and are governed by the Income Tax Act 1961. An OCI will be treated as an Indian resident for tax purposes if they stayed in India for more than 182 days during a financial year or 365 days within the preceding four financial years and at least 60 days in the previous financial year. An OCI classified as a resident their global income will be taxed in India.

OCI cardholders can benefit from Double Tax Avoidance Agreement (DTAA) agreements between India and their country of residence to avoid double taxation.

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Financial and Legal Implications of OCIs

OCI cardholders can operate bank accounts in India and invest in different asset classes, such as mutual funds, the stock market, and real estate. OCI enjoys several privileges, such as a multiple-entry, multi-purpose life-long visa to visit India, exemption from reporting to Police authorities for any length of stay in India; and parity with NRIs in financial, economic, and educational fields. Along with many privileges, there are a few restrictions as well. An OCI is not allowed to vote; cannot become a member of a Legislative Assembly or of a Legislative Council or of a member of Parliament; cannot hold Indian constitutional posts such as that of the President, Vice President, Judge of the Supreme Court or High Court, etc. They can work in the private sector and access educational institutions under the NRI quota.

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Banking and Financial Management for OCIs

Banking and financial management for OCIs involve critical considerations for managing income, investments, and repatriation while complying with Indian laws. OCI card holders can open NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (Foreign Currency Non-Resident) bank accounts. While NRE and FCNR accounts are tax-free and fully repatriable, NRO accounts are taxable, and repatriation is limited to USD 1 million per financial year. OCIs are taxed on Indian income and also get benefits under DTAA to avoid double taxation.

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Investment Opportunities in India for OCIs

There are various investment opportunities in India for OCIs few are listed below:

Real Estate: OCIs can purchase residential and commercial properties in India. However, they cannot purchase agricultural lands, plantations, or farmhouses.
Mutual Funds: Mutual fund investments can be the most desirable choice for OCIs. There are various types of mutual funds, such as equity, debt, hybrid, etc. One can choose a lump sum or SIP route depending on one's preference.
Equities: OCIs can invest in stocks, exchange-traded Funds (ETFs), and Equity Mutual Funds. RBI allows OCIs to invest in Indian companies through its Portfolio Investment Scheme (PIS), which comes under the Foreign Exchange Management Act (FEMA).
Fixed and Debt Instruments: OCIs looking for a safer avenue can invest in fixed deposits in banks, post offices, and other places, as well as government bonds, corporate bonds, infrastructure bonds, and non-convertible debts.
Insurance: OCIs are allowed to buy insurance products in India. They can choose health and life insurance to protect themselves and their families.
NPS: OCIs aged between 18 and 70 can secure their retirement by investing in NPS. OCIs are eligible to open only Tier I accounts under NPS. Under 80C, there is a tax deduction of 1,50,000 per year.
Gold and Precious Metals: OCIs can invest in physical gold, gold coins, silver coins, and ETFs. However, they cannot invest in Sovereign Gold Bonds (SGBs), restricted to Indian residents.
REITs/InvITs: OCIs can invest in Real Estate Investment Trust and Infrastructure Investment Trust, which provide an opportunity to earn regular income and capital appreciation without directly owning physical property or infrastructure assets.
Invest in GIFT City Funds: These are mutual funds launched in the Gift City by Asset Management Companies (AMCs) governed by the International Financial Services Centre Authority (IFSCA). An OCI can invest and withdraw in foreign currency; it is exempt from tax deducted at source (TDS), and funds are easy to repatriate. The minimum investment in Gift City funds is USD 150,000 or above, making it only accessible to individuals with sizable investable assets and less liquid than traditional mutual funds.

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How Can iNRI Help OCIs?

iNRI allows OCIs to open NRE/NRO bank accounts and helps in the OCI card process and mutual fund investments. iNRI also helps OCI to invest in startups and GIFT City Funds and with taxation.

Link Button Invest Now👉

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Conclusion

The OCI scheme bridges the gap between India and its diaspora and has many advantages, like multiple-entry lifetime visas and employability in the private sector. It provides OCIs with parity to NRIs regarding investment and financial opportunities, allowing them to purchase assets, invest in stocks and mutual funds, and explore other avenues to grow their wealth and maintain a strong connection with India. A person registered as an OCI can also apply for a grant of Indian citizenship under section 5(1) of the Citizenship Act 1955 after 5 years and meeting other specific criteria.

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Frequently Asked Questions (FAQs): OCI

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What is the difference between OCI, NRI, and PIO?

An Overseas Citizen of India (OCI), meaning a foreign national of Indian origin who holds an OCI card, enjoys benefits like a lifetime visa and the ability to work and invest in India. An NRI (Non-Resident Indian) refers to an Indian citizen living outside India, while a PIO (Person of Indian Origin) is a foreign citizen with Indian ancestry.

Note: In 2015, all PIO cardholders were merged into OCI cardholders.

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Can OCI cardholders vote in Indian elections?

No. OCI cardholders are not allowed to vote in Indian elections.

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Who is eligible to apply for an OCI card?

The following persons are eligible to apply for an OCI card:

Persons of Indian Origin (PIOs): All PIOs who were citizens of India on or after January 26, 1950, or were eligible to become citizens of India on that date, are eligible to register as OCIs.
Children and Grandchildren of Indian Citizens: Children and grandchildren of Indian citizens who are citizens of other countries are also eligible to apply for OCI cards.
Spouse of an Indian Citizen or OCI Cardholder: Spouses of Indian citizens or OCI cardholders are eligible to apply for OCI cards if they have been married for at least two years.

It's important to note that persons who are or have been citizens of Pakistan or Bangladesh are not eligible to apply for OCI cards.

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What are the main benefits of having an OCI card?

Some of the main benefits of having an OCI card are:

Multiple Entry Lifetime Visa
OCI cardholders are exempt from registering with local police authorities for any length of stay in India
Parity with Non-Resident Indians in the matter of inter-country adoption of Indian children.
There is parity with non-resident Indians concerning practising the following professions in India: doctors, dentists, nurses, pharmacists, advocates, architects, and Chartered Accountants.
Parity with resident Indian nationals in matters of tariffs on domestic airfares.
Parity with domestic Indian visitors regarding entry fees for visiting national parks and wildlife sanctuaries in India.

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Can OCI cardholders own property in India?

Yes, OCI (Overseas Citizen of India) cardholders can own residential and commercial property in India but cannot purchase agricultural land, plantation properties, or farmhouses.

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