How to File ITR as an OCI on Indian Income?

An OCI (Overseas citizen of India) also needs to pay tax on income earned in India or deemed to arise in India.

They are foreign nationals of Indian origin who can enter India to work, live, or study for an indefinite period. There are many benefits of being an OCI cardholder, such as multiple visa-free entries to India, without reporting the duration of stay to local police or higher authorities. 

However, along with it, you also have to follow all the rules and regulations of the Indian tax laws, which require you to file an ITR for your earnings in India as an NRI under the Income Tax Act. 

In this blog, we will see the tax implications of OCIs in India, the tax filing process, residency status, and income taxable under the Income Tax Act, 1961.

What is Overseas Citizenship of India (OCI)? 

An OCI card is a travel and identification document issued to a foreign national of Indian origin. It was introduced in the revised Citizenship Act, 1955, in August 2005 by the Indian government. 

A person of Indian origin living in a foreign country is eligible to apply for an OCI card, except for citizens of Bangladesh and Pakistan. 

OCI cardholders receive multiple benefits, such as lifelong visa-free entry and equal rights in the financial, economic, and educational sectors as NRIs.

Here are some of the eligibility criteria to apply for the Overseas Citizens of India (OCI) below:

• If you are an Indian citizen on and after 26 January 1950, and become a foreign citizen. 
• If you belong to an Indian territory that became part of India after 15 August 1947, or you are eligible to become an Indian citizen on January 26, 1950. 
• For a minor, if their parents are Indian citizens or one of their parents is of Indian origin. 
• If your parents, grandparents, or great-grandparents are of Indian origin or were Indian citizens. 
• Spouse of a citizen of India or an OCI cardholder, and has been married for more than 2 years. 

Do OCIs Need to Pay Tax in India

Yes, OCIs need to pay taxes if their total income has exceeded the basic exemption limit. Then they need to pay the required tax in India under the Income Tax Department's tax slabs. An OCI can also be subject to Tax Deducted at Source (TDS) on income earned in India. 

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What are the Income Tax Rules for the OCIs in India

Here are the income tax rules for the OCIs in India, which you need to remember: 

• The taxation of income depends on your residential status, and the Indian Income Tax rules govern it. 
•  You will be considered an Indian resident if you stay in India for more than 182 days or more in a financial year, or a total of 365 days in the last four financial years, or 60 days in the previous financial year. Then you have to pay tax on the income you earn in India and globally.
• If you are an Indian resident, you must file an income tax return on your Indian income as well as on your global income. 
• The taxation of individuals is applied to global income, but with the help of a Double Taxation Avoidance Agreement (DTAA), you can prevent paying tax twice on the same income.
• If an individual stays in India for a few days and their income exceeds the basic exemption limit, a TDS refund is claimed. They also need to file an Income Tax Return and pay taxes on the days of income earned in India. 
• Your foreign earnings and interest from an NRO account are fully taxable in India and also subject to TDS with 30% plus cess.

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Taxation for the OCI in India

The Overseas citizens of India are also taxed the same as the Indian residents. Here are the given income tax slab rates for the NRIs and OCIs for the financial year 2025-26. 

Note: there is a 4% cess which is chargeable on the calculated tax income in the table above. 

You will also need to pay an additional surcharge if an OCI cardholder's income is more than the actual threshold limit. See the table given below to check surcharge rates: 

Relief from the Double Taxation Avoidance Agreement for OCI

The DTAA (Double Taxation Avoidance Agreement) plays a crucial role in tax prevention. It helps the taxpayers to pay tax twice on the same income. India has signed DTAs with over 90 countries, allowing them to claim relief from double taxation on the same income.

To get relief under the Double Tax Avoidance Agreement (DTAA), you need to get the tax residency certificate (TRC), PAN, or the Form 10F from the tax authorities of your residence country. This certificate confirms your tax residency status and allows you to claim all tax exemptions or reduced taxes on your Indian income. 

If the individual is a taxable person in India, they must pay tax and comply with all Indian taxation rules. However, they can also claim their applicable tax in their home country through the DTAA, which helps them to avoid paying tax on the same income. 

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Process to File ITR as an OCI

Here is the process that you need to follow to file your Income Tax return in India as an OCI cardholder. 

1. You need to visit the official Income Tax portal website and create a login ID. 
2. Log in to the portal by entering the required information, including PAN number, mobile number, and email address. 
3. Now, you need to prepare your ITR in accordance with all rules, regulations, and provisions applicable to OCI cardholders. 
4. You need to submit the ITR and file the Income Tax Return on the official portal of the Income Tax Department.
5. You will get an Acknowledgement of ITR-V once you have uploaded your ITR. 
6. Now, you need to verify the ITR-V on the portal by yourself, sign the hard copy of the portal and send it to the official tax processing centre, or you can confirm it with the help of Aadhar OTP, DSC, or Net banking. 
7. You will be notified by the department about the processing of your ITR and the issuance of all refunds.

Final Thoughts

With an OCI card, you can get many benefits, like a visa, multiple entries, the same status as an NRI in the educational, economic, and financial sectors, and stay in India without reporting the duration of your stay to any local police or higher authority. All OCI cardholders who earn a valid income in India need to pay the income tax return on the revenue generated or arising, or deemed to arise in India. 

You can also take help from the Visament, which helps you provide accurate tax information and determine your residency status in India. We provide hassle-free, straightforward tax savings in accordance with Indian income tax laws.