Overseas Citizenship of India (OCI)

Who is eligible for OCI?

Persons of Indian Origin, who migrated from India after 26 January, 1950, and

1. who were citizens of India on or at anytime after 26.01.1950 or
2. who were eligible to become Indian citizens on 26th January, 1950 or
3. belonged to a territory that became part of India after 15th August, 1947 and
4. their children and grand children,

whose present nationality is such that the country of nationality allows dual citizenship in some form or the other under the local laws, will be eligible to be registered as OCI. Minor children of such persons are also eligible for registration as OCI. However, minor children, whose both parents are Indian citizens, are not eligible for OCI.

OCI is a passage to become Indian Citizen
The grant of OCI is extended to citizens of all countries (which allow dual nationality) other than those who had ever been citizens of Pakistan and Bangladesh. The amended legislation further reduces the period of stay of ‘two years’ to ‘one year’ in India for OCI, who is registered for five years, to become eligible for grant of Indian citizenship.

Article 9 of the Constitution of India clearly states that a person shall cease to be a citizen of India, if he voluntary acquires the citizenship of any foreign State. Therefore, one cannot have citizenship of any other country, if he is an Indian citizen. The expression ‘dual citizenship’ is, therefore, a misnomer. However, the technical term used for the scheme in the Citizenship Act, 1955 (as amended vide Amendment Act, 2005) is ‘Overseas Citizenship of India (OCI)’.

Persons registered as OCI are not Indian citizens. This is a new category of citizenship created under the statute with certain restricted rights as compared to Indian citizens.

OCIs holder can not hold the following positions:

1. Public employment,
2. election to Constitutional offices like President/Vice President/Judges of the Supreme Court or High Courts
3. Members of Parliament or Legislative Assembly/Council or
4. right to vote under Representation of People Act, 1950.

A person registered as OCI is entitled to the following benefits:

1. Grant of multiple entry, multi-purpose lifelong visa to visit India;
2. Exemption from registration with FRRO/FRO for any length of stay in India; and
3. Parity with NRIs in economic, financial and educational fields except in matters relating to acquisition of agricultural/plantation properties.

The benefits of seeking OCI are available on MHA’s website http://www.mha.nic.in/

Sale, Purchase, etc., of Immovable Property in India

The Foreign Exchange Management Act, 1999 (FEMA), came in force with effect from June 1, 2000. Section 6(3)(i) of the Act empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons mainly residents outside India. The restrictions under this clause are not applicable to a lease of immovable property for a period not exceeding five years. The regulations made by the Reserve Bank are called Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations, 2000, and have been notified vide Notification FEMA No.21/2000-RB of May 3,2000. Synopsis of the said Regulations is as under:

1. 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 Reserve Bank for acquiring or transferring any immovable property in India.
2. A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office, or place of business in India( excluding a Laison Office), has general permission of 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.
3. An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/ plantation property or a farm house.
4. An Indian citizen resident outside India does not require any permission to transfer any immovable property, to a citizen of India who is resident in India.
5. An Indian citizen resident outside India does not require any permission to transfer any immovable property other than agricultural or plantation property or farm house, to a person who :- is a citizen of India resident outside India , or is a person of Indian origin resident outside India.
6. A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds: received in India by way of inward remittance through banking channel from any place outside India, or held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.
7. A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India other than agricultural land/farm house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India.
8. A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India.
9. A person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.
10. A person of Indian origin resident outside India does not require any permission to transfer agricultural land/farm house/plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India.
11. A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.
    
12. Repatriation outside India , including credit to RFC, NRE or FCNR account, of sale proceeds of any immovable property situated in India, requires prior permission of the Reserve Bank except in circumstances stated in paragraph 13 below.
    
13. In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a person resident outside India, who is a citizen of India, or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied :-
    i. the immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules /Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act,1999;
    ii. the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and
    iii. in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
    14. Authorised Dealers have been permitted to allow the facility of repatriation of funds by NRIs/PIOs in their Non-Resident Ordinary Rupee (NRO) account upto USD One Million per year representing sale proceeds of immovable property held by them for a period of not less than 10 years subject to payment of applicable taxes.
    
14. All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.
    
15. The NRIs/ PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely repatriable outside India.
    

Can NRI / PIO rent out the residential / commercial property ?

Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?

Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank.

Rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.[cf. A.P. (DIR Series) Circular No. 45 dated May 14, 2002].

Can NRI / PIO repatriate the sale proceeds of immovable property? If so, what are the terms?

NRI / PIO may repatriate the sale proceeds of immovable property in India

If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B) account The amount to be repatriated should not exceed the amount paid for the property:

1. in foreign exchange received through normal banking channel or
2. by debit to NRE account(foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.

Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.

If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.

How can an NRI / PIO make payment for purchase of residential / commercial property in India ?

Payment can be made by NRI / PIO out of

1. Funds remitted to India through normal banking channel or
2. Funds held in NRE / FCNR (B)/ NRO account maintained in India
3. No payment can be made either by traveller’s cheque or by foreign currency notes.
4. No payment can be made outside India.

Can an NRI/ PIO/foreign national sell his residential / commercial property?

(a) NRI can sell property in India to-

1. a person resident in India or
2. an NRI or
3. a PIO.

(b) PIO can sell property in India to

1. a person resident in India.
2. an NRI or
3. a PIO – with the prior approval of Reserve Bank

(c) Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to

1. a person resident in India
2. an NRI
3. a PIO

Whether a non-resident can inherit immovable property in India?

Yes, a person resident outside India i.e.

1. an NRI
2. a PIO and
3. a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of Reserve Bank.

A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from (a) a person resident in India. (b) a person resident outside India However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point of time.