Based on the recommendation of the High Level committee on Indian Diaspora, the Government of India decided to grant Overseas
Citizenship of India (OCI) commonly known as ‘Dual Citizenship’. Persons of Indian Origin (PIOs) of certain category as has been specified in the Brochure who migrated from India and acquired citizenship of a foreign country other than Pakistan and Bangladesh, are eligible for grant of OCI as long as their home countries allow dual citizenship in some form or the other under their local laws.

Persons registered as OCI have not been given any voting rights, election to Lok Sabha/Rajya Sabha/Legislative Assembly/Council, holding Constitutional posts such as President, Vice President, Judge of Supreme Court/High Court etc. Registered OCIs shall be entitled to following benefits:

• Multiple entry, multi-purpose life long visa to visit India;
• Exemption from reporting to Police authorities for any length of stay in India;
• Parity with NRIs in financial, economic and educational fields except in the acquisition of agricultural or plantation properties.

A person registered as OCI is eligible to apply for grant of Indian citizenship under section 5(1)(g) of the Citizenship Act, 1955 if he/she is registered as OCI for five years and has been residing in India for one year out of the five years before making the application.

Click here for further information on Overseas Citizenship of India (OCI)

Non-Resident Indian (NRI)

An Indian Citizen who stays abroad for employment/carrying on business, to pursue a vocation outside India or under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.

Overseas Corporate Bodies (OCB)

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India, as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%.

Person of Indian Origin (PIO)

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India, Person of Indian Origin means a citizen of any country other than Pakistan or Bangladesh if,

• he at any time, held an Indian passport
• he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1995)
• the person is a spouse of an Indian citizen

For investments in immovable properties, Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal or China or Iran)

• who at any time, held an Indian passport
• who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

Certificate for Ownership/Beneficial Interest of NRIs in Overseas Corporate Bodies

In order to establish that the ownership/beneficial interest in any OCB held by NRIs is not less than 60%, the concerned body/trust is required to initially furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC where the ownership/beneficial interest is directly held by NRIs, and in form OAC 1 where it is held indirectly by NRIs and further that such ownership interest is actually held by them and not in the capacity as nominees. Thereafter, a simple certificate signed by the Managing Director or Chief Executive Officers of the OCB on the lines indicated above may be submitted.

Note : In the case of closely held OCBs (i.e. where shareholders belong to the same family or are closely related to each other, certificate in form OAC/OAC1 may be submitted in the first instance alongwith documentary evidence to the effect that the shareholders belong to the same family or are closely related to each other. Annual submission of OAC/OAC1 thereafter is not necessary, and it will suffice if a certificate signed by the Managing Director/Chief Executive Officer of the OCB is submitted stating that there is no change in the shareholding pattern since submission of the last certificate.

Recognising the investment potential of the Non-Resident Indians, a number of steps are being taken by the Government on an ongoing basis to attract investments from them in Indian companies. Some of the investment schemes presently available to Non-Resident Indians (NRIs) include the facility to invest upto 100 percent equity with full benefits of repatriation of capital invested and income accruing thereon in high priority industries mentioned in the Annexure-III to the Industrial Policy 1991. These include 100 percent export oriented units, sick units under revival, housing and real estate development companies, etc.

NRIs/PIOs/OCBs are also permitted to make portfolio investments through secondary markets. In terms of the relaxations announced in 1998-99, investment limits for an individual NRI has been revised upwards from 1% to 5%, aggregate portfolio investment limits by all NRIs increased from 5% to 10% of the issued and paid-up capital of the company. The aggregate investment limit would be separate and exclusive of FII portfolio investment limits.

Facilities Available to NRIs /OCBs

The various facilities available to NRIs /OCBs for investments in India are:

• Maintenance of bank accounts in India
• Investments in securities/shares of, and deposits with, Indian firms/companies.
• Investment in immovable properties in India

NRIs/PIOs/OCBs are permitted to open bank accounts in India out of funds remitted from abroad, foreign exchange brought in from abroad or out of funds legitimately due to them in India, with an authorised dealer.

Such accounts can be opened with banks specially authorised by the Reserve Bank in its behalf [Authorised Dealer (AD)]. NRI accounts are of five types:

• Non-Resident (External) Rupee Accounts (NRE Accounts) - These are rupee denominated accounts and can be in the form of savings, current, recurring or fixed deposit accounts.
• Ordinary Non-Resident Rupee Accounts (NRO) - These are rupee denominated non-reportable accounts and can be in the form of savings, current recurring or fixed deposits. These accounts can be opened jointly with residents of India.
• Non-resident (Non-reportable) Rupee Deposit Accounts (NRNR Accounts) - NRIs/PIOs/OCBs, other non-resident Individuals/entities are permitted to open these accounts. Accounts can be opened by transfer of freely convertible foreign currency funds from abroad, or from NRE/FCNR accounts. Deposits can be held jointly with a resident.
• Non-Resident (Special) Rupee Accounts with banks in India - These accounts are meant for NRIs/PIOs and will be at par with rupee accounts, maintained by residents. NRIs/PIOs can open Non-Resident (Special) Rupee Accounts with banks in India, which have the same facilities and restrictions as are applicable to rupee accounts maintained in India by residents, relating to repatriation of funds held in these accounts and/or income/interest earned on them.
• Foreign Currency (Non-Resident) Accounts (Banks) (FCNR (B) Accounts) - NRIs/PIOs/OCBs are permitted to open such accounts in US Dollars, Sterling Pounds, Deutsche Marks, Japanese Yen and Euro. These accounts may be opened only in the form of term deposits.

Direct Investment Opportunities

NRIs & OCBs can invest in India as under

• Investment under Automatic Route with repatriation benefits
• Investment with Government approval
• Other investments with repatriation benefits
• Investments up to 100% equity without repatriation benefits
• Other investments by NRIs/OCBs without repatriation benefits.

For further details on the above click here

More details on Reserve Bank of India website

NRIs/OCBs are permitted to make portfolio investment in shares/debentures (convertible and non-convertible) of Indian companies, with or without repatriation benefit provided the purchase is made through a stock exchange and also through a designated branch of an authorised dealer. NRIs/OCBs are required to designate only one branch authorised by the Reserve Bank for this purpose.

More on Portfolio Investment

A person resident outside India and a person of Indian origin can acquire, transfer or rent immovable property other than agricultural land/farm house/plantation property in India without prior permission, subject to certain conditions.

However, all persons whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan require prior permission of the Reserve Bank for acquiring or transferring any immovable property in India.

A person resident outside India, who has been permitted by the Reserve Bank to establish a branch, or office, or place of business in India (excluding a Liaison Office), has general permission of the Reserve Bank to acquire immovable property in India, which is necessary for, or incidental to, the activity. However, in such cases a declaration, in prescribed form (IPI), is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.

PIO Card Scheme

The Government has launched a comprehensive Scheme for the Persons of Indian Origin-called the 'PIO Card Scheme'. Eligibility for the scheme includes Persons of Indian Origin up to the fourth generation (great grand parents) settled throughout the world, except for a few specified countries. The Card would be issued to eligible applicants through the concerned Indian Embassies/High Commissions/Consulates. The same facility will be made availiable to those staying in India on a long-term visa by the concerned Foreigners Regional Registration Officer (Delhi, Mumbai, Calcutta, Chennai). The fee for the card, which will have a validity of 20 years, would be US$1000.

Form for Grant/ Renewal of PIO Card

More on PIO Card Scheme

Taxation

In order to help the tax-payers to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation, a scheme of Advance Rulings has been introduced under the Income-Tax Act, 1961. The Authority for Advance Rulings has also been constituted. The tax-payer can obtain a binding ruling from the Authority on issues which could arise in the determination of his/her tax liability. A non-resident or certain categories of resident can obtain binding rulings from the Authority on any question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of this tax liability.

Non-Resident Taxation in India