Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are considered the most common categories of individuals who stay in a foreign country for any reason. It is necessary to understand their meaning, differences, and eligibility, as it will provide you with clarity on your applicable rights and residential status.
In this blog, we have simplified both the statuses and untangled the differences between them, so that you can navigate their unique identities and applicable benefits within the legal status. We have also mentioned their advantages and disadvantages, so you must have all the details beforehand to understand them better.
A Non-Resident Indian (NRI) is an Indian citizen who is living in a foreign country for several reasons, such as study, work, or business.
As per the Indian Income Tax Act, if you have spent less than 182 days in India in a financial year, then you will be considered an NRI. And, as per the Foreign Exchange Management Act (FEMA), you will be considered an NRI if you move out of India for business or job purposes for an indefinite time.
It is important that you tell your bank as soon as possible after you become an NRI. NRIs are not allowed to keep a regular savings account in India; they need to open an NRI account online.
An Overseas Citizen of India (OCI) is a foreign citizen of Indian origin. It provides the Citizens of Indian origin visa-free entry as many times as they want for a lifetime. They can stay as long as they want in India and stay and work here indefinitely. As India does not allow dual citizenship, this OCI card provides its holders with the same benefits. With this card, you don't have to inform the authorities about the length of your stay.
Here are the advantages and disadvantages of NRI:
| Advantages | Disadvantages |
|---|---|
| NRIs are allowed to vote in the Indian elections. | Income obtained from salary for services rendered/provided in India and any other income earned in India is taxable for them. |
| NRIs can purchase health insurance plans and life insurance plans, and invest in bonds, financial securities, ELSS, etc. | NRIs are not allowed to open a PPF account (But they can still invest if they had their PPF accounts already opened when they were resident Indians). Also, they cannot invest in the National Savings scheme (NSC), 5-year Post Office Deposit Scheme, and Senior Citizen Savings Scheme (SCSS). |
| The Indian education system gives special reservations to the NRIs and their children. | NRIs are not allowed to have the citizenship of their country of residence. Even if it's applicable, it is a complicated and lengthy process. |
Here are the advantages and disadvantages of being an OCI:
| Advantages | Disadvantages |
|---|---|
| The OCI cardholders can take many benefits from it, such as a multiple-entry, multi-purpose lifetime visa to visit India. They can reside and work in India as long as they want. | An OCI cardholder is not allowed to buy any agricultural land in India, but they can inherit farmland. |
| The OCI does not need any special approval to stay and work in India. | An OCI is not eligible to vote or participate in the Indian elections. |
| The OCI is not required to register with the FRRO or local police for any length of stay. | An OCI is not eligible to apply for a government job in India. |
| The educational and financial benefits for OCIs are similar to those of NRIs. | - |
| Factors | NRI | OCI |
|---|---|---|
| Eligibility |
If the individual does not satisfy the conditions below in the previous financial year, then he/she will be considered an NRI:
|
A foreign national is allowed to obtain an OCI card if he/she satisfies any of the following conditions:
|
| Application | To become an NRI, there is no such application process. | The eligible individuals can apply for an OCI card by using the online OCI services portal. They need to follow all the given instructions, provide the required details, and pay the applicable fees. |
| Options for Investment | NRIs are allowed to invest in various financial investment options, such as government securities, equity mutual funds, etc. They are also allowed to own commercial or residential properties. | OCI cardholders can invest in various financial investment options, such as mutual funds, equity, government securities, etc. They can also own residential or commercial properties, but they are not allowed to own any agricultural property unless inherited. |
| Applicability related to residence in India | 182 days or fewer in a particular year | OCI cardholders can stay and work in India for an indefinite time. |
| Required Documents | As there is no application process to become an NRI, no specific documents are required. Although in some scenarios, overseas residential proof might be required. |
Here are some of the necessary documents that are required for an OCI card application:
|
Many Indians live outside their country for different reasons, and they have different statuses according to their situations. Your residential status totally depends on where you stay and your citizenship. Once you know their benefits, differences, and their disadvantages, then you can understand them in a better way and stay compliant with the legal laws and taxation.
You can also take help from the professionals on the Visament platform. Their experts have years of experience, and they can help you understand your residential status and how you can use their benefits in your favour.
Yes, non-resident Indians (NRIs) can invest in mutual funds in India.
NRI stands for non-resident Indians.
OCI stands for overseas citizens of India.
No, non-resident Indians are not allowed to buy direct land and property in India.
Yes, (OCI) overseas citizens of India can get an Aadhar Card, but for that, they need to fulfill the requirements.
Yes, OCIs can buy commercial and residential property in India.
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