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Many famous personalities like Kalpana Chawla, Jhumpa Lahiri, Amartya Sen, Lakshmi Mittal, and Indira Nooyi proved their mettle in various fields. These people stayed outside India but worked for India. But have you ever thought about their residential status? Were they Indian residents, or NRIs or OCIs? Well, this article will cover everything that you need to know about what is NRI and OCI, the difference between NRI and OCI, and the bank accounts applicable to NRI and OCI.
An NRI or a Non-resident Indian is an individual who is a citizen of India but resides outside India for business, employment, profession, or higher education. NRIs are those individuals who intend to stay outside of India for an indefinite period.
It is important to identify your residential status to understand the tax rules and regulations. Generally, NRIs have to pay taxes in India in the following circumstances -
An Overseas Citizen of India (OCI) is a foreign citizen who is of Indian origin. They are permitted to reside and work in India indefinitely. As per Section 7A of The Citizenship Act 1955, foreign citizens can register as OCI cardholders.
The OCI card, issued by the Indian government, signifies permission for non-residents or foreigners to live and work within India's borders. This card grants immigration status without any restrictions on tenure. Certain categories of Persons of Indian Origin (PIOs) who have moved from India to other countries (excluding Pakistan and Bangladesh) may also be eligible for OCI cards if their respective governments allow dual citizenship.
However, the following individuals cannot hold an OCI card -
If you are wondering what is the difference between NRI and OCI, refer to the table below. Here are the differences between OCI and NRI -
| Basis | NRI | OCI |
|---|---|---|
| Eligibility | An individual can be called a resident of India if he/she resides in India for less than 182 days. | Any foreign national eligible to become an Indian citizen after 1950 or someone who belonged to a territory that became a part of India after 1947. |
| Applicability | You don’t need to apply anywhere to become an NRI. As soon as you fulfill the eligibility criteria, you automatically attain the status of an NRI. | You have to apply for the OCI card through the Indian government's online portal. |
| Investment options | NRIs can invest in commercial/residential property but not in agricultural, farmhouse, or plantation property. | OCI holders can also invest in commercial/residential property but not in agricultural, farmhouse, or plantation property. |
| Taxation | Income earned through receipts and investments in India is taxable in India. | OCI cardholders have to pay tax on their global income |
| Documentation | Overseas residential proof |
|
| Residential Status | For 182 days or less | For an indefinite period |
The following bank accounts can be opened by NRIs and OCIs in India -
These accounts cater to the spending and investment needs of Non-Resident Indians (NRIs) or Overseas Citizens of India (OCIs) residing in countries outside India.
The deposited funds and the interest accrued are completely repatriable, meaning they can be freely transferred abroad. Additionally, the interest earned is exempt from taxation.
Hope this article helped clarify the difference between NRI and OCI, their meaning and full form, bank accounts, eligibility criteria, etc. Now that you know what is the difference between NRI and OCI, you can make sure to claim the tax benefits available to NRIs. You can also consult tax experts to make the most of all the tax benefits and never miss a potential deduction. Get Tax Consultancy Services Now!
OCI, or Overseas Citizenship of India, is a permanent residency provided to people of Indian origin along with their spouses. This residency allows them to live and work in India for an indefinite period of time.
An OCI card holder gets a life long visa to stay and work in India for an indefinite period of time and free travel to India. However, a PIO cardholder can only stay and work in India for a period of 15 years.
