Difference Between NRI and OCI: A Detailed Guide

The rate of migration abroad has been steadily rising year after year due to job possibilities and technical developments. Higher education and marriage settlement are the two main reasons for international migration, aside from work-related factors. The Indian government has made a number of provisions to support people who choose to live overseas but still maintain their Indian heritage. Overseas Citizens of India (OCIs) and Non-resident Indians (NRIs) are the most important groups in this context. Clarity on the residence status and relevant rights can be achieved by comprehending their meaning, eligibility, and distinctions. In order to traverse their distinct identities and relevant benefits within the legal status, we have clarified the distinctions between NRI and OCI. Here is all the information you require regarding OCI vs. NRI.

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Table of Contents

Who are NRIs?

Who are OCIs?

Difference Between NRI and OCI

Bank Accounts Applicable to NRI and OCI

Conclusion

Frequently Asked Questions

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Who are NRIs?

A person who is an Indian citizen who lives outside of India for work, study, or other reasons is known as a non-resident Indian, or NRI. Those who plan to remain outside of India for an extended length of time are known as non-resident Indians (NRIs).

• If a person spent at least 182 days in India during the last financial year, they are regarded as a resident, or

• Any individual who spent at least 60 days during the previous financial year and 365 days throughout the previous four years in India.

To stay in compliance with the tax laws of the country, it is crucial to determine your residential status. In India, NRIs are typically required to file and pay taxes under the following conditions:

• Making money outside of India and getting it inside its borders. For instance, the Central Bank of India in India paid the freelancer for work completed for a company based in Toronto.

• Income obtained outside of India yet earned within the country. For instance, American Express's Chicago location receives the rent for an apartment in Delhi.

Who are OCIs?

A foreign national of Indian ancestry is known as an Overseas Citizen of India (OCI). They are allowed to live and work in India for as long as they choose. Foreign nationals may apply to become OCI cards in accordance with Section 7A of the Citizenship Act of 1955. The Indian government issues the OCI card, which authorizes foreigners or non-residents to live and work inside India's boundaries. With no tenure limits, this card confers immigrant status. If their respective governments permit dual citizenship, several groups of Persons of Indian Origin (PIOs) who have emigrated from India to other nations—apart from Bangladesh and Pakistan—may also qualify for OCI cards.

Nevertheless, the following people are not eligible to possess an OCI card:

• An OCI card cannot be held by citizens who have served in the armed forces of another nation.

• Residents from Pakistan and Bangladesh who migrate are not permitted to possess an OCI card.

Notably, an OCI card is valid for the duration of the cardholder's life after it is issued and has no expiration date.

Difference Between NRI and OCI

The following table highlights the differences between NRI and OCI:

Bank Accounts Applicable to NRI and OCI

In India, the following bank accounts can be legitimately opened by NRIs and OCIs:

• Non-Resident External (NRE) Account: People who earn money outside of India can create an NRE account in India. The funds are taken out in Indian rupee after being deposited in foreign currency. Both the interest earned and the deposits for these accounts are tax-exempt.

  
  

• Non-Resident Ordinary (NRO) Account: People who earn money in India can create an NRO account there. Indian rupees are used for both deposits and withdrawals. Depending on the relevant tax limits, the deposited funds may be returned to the account holder's home country. Interest earned must be taxed at the appropriate TDS rates.

  
  

• Foreign Currency Non-Resident Account (FCNR): An FCNR account allows foreign currency income to be transferred to an Indian account. Withdrawals are done in foreign currencies, and currency deposits are held in a variety of specific currencies, such as SGD, AUD, USD, CAD, etc.

These accounts serve the investment and spending requirements of Overseas Citizens of India (OCIs) or Non-Resident Indians (NRIs) who live outside of India. The deposited money and interest can be freely transferred overseas because they are fully repatriable. The interest earned is not liable to tax.

Conclusion

The Indian government has been creating and implementing policies that allow foreigners to live and work there without restriction. Every person who intends to move, however, needs to be aware of the requirements and characteristics in order to maintain their roots and maintain a modest relationship between their home nation and their homeland. Understanding the difference between these residence statuses is essential to comply with regulations and guidelines.

Frequently Asked Questions Is OCI a Permanent Resident of India?

People of Indian descent and their spouses are granted permanent residency through the Overseas Citizenship of India (CI) program. They can live and work in India for an infinite amount of time because of this residency.

How long can an NRI stay in India with an OCI card?

An OCI card bearer is granted a lifetime visa that allows them to travel freely throughout India and work and reside there for an infinite amount of time. A PIO cardholder, however, is only permitted to remain and work in India for a maximum of 15 years.

Can an OCI live permanently in India?

OCI cardholders are permitted to remain and work in India indefinitely. The OCI card entitles holders to a multiple-entry visa for life. It enables them to travel freely and without difficulty throughout India.

Are OCI cardholders required to pay Income Tax in India?

Yes, OCI cardholders are taxed based on their residential status during the relevant year.

Can an OCI and NRI get an Aadhaar Card in India?

Residents of India are eligible to enroll for an Aadhaar Card in India. NRIs are not eligible to apply for it if they have not spent more than 182 days in India during the 12 months preceding the application date. Additionally, OCI cardholders with an Indian residence and more than 182 days of stay in India within the 12 months before the application deadline for enrollment can apply for an Aadhaar Card.

Can an OCI and NRI own a residential property in India?

In India, it is possible for both OCIs and NRIs to buy and own residential real estate. Additionally, they are not limited in how many homes they can own. However, unless they inherit such lands from their family, OCIs are not permitted to own and own agricultural land.

Is an OCI allowed to a resident bank account in India?

In India, OCIs are permitted to open resident bank accounts. However, opening a resident account in India is prohibited for foreign visitors on short-term visas as well as foreign students studying there.

What is the difference between OCI and NRI?

Overseas Citizens of India, or OCI for short, is a status granted to overseas nationals of Indian descent that grants them the freedom to remain and work in India for as long as they choose. An NRI, on the other hand, is an Indian who lives outside of India for work, business, or any other reason. It may be for a brief period of time. The primary distinction between OCIs and NRIs is that OCIs citizenship is based on their nation of origin, while NRIs retain their Indian citizenship.