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By Vipul Jain | 29 Nov, 2025
If you are an OCI/PIO and plan to stay and work in India, you might face confusion about every financial matter, whether your income will be taxable or not, which Forms you need to fill out, and many more. For the answers to all these questions, you will require the legal guidance from a qualified tax and FEMA advisor.
In this blog, we have addressed all the possible questions you might have as an OCI living in India. We have talked about the criteria to determine the residential status and the ways to calculate the taxation on the income.
Most people get confused about the fact of determining the residential status of individuals in India. According to the Income Tax Act (ITA) and the Foreign Exchange Management Act (FEMA), the OCI status of a person is not related to their residential status.
The residential status in India is determined by the two main laws in India, which are the ITA and FEMA. ITA takes care of the taxability of that person's income in India, while FEMA is related to the foreign exchange and compliance of such a person.
For ITA, the important thing is how many days a person stays in India for a relevant financial year. For FEMA, the thing that matters the most is the intention of the person behind their stay in India.
If we talk in a general sense, then an OCI who is living and working in India for more than two years or a longer period of time, then he will be declared as a Resident and Ordinarily Resident (ROR) according to the Income Tax Act.
As per ITA, if an OCI is ROR, then his global income will be taxable in India. For their foreign income, they can avail the DTAA benefits or claim the tax credits for the tax they have paid in a foreign country.
If an OCI is considered an RNOR as per the ITA, only his Indian income will be taxable in India. Any income from outside India will not be taxable in the country, and it should be directly received in the bank account in India.
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Apply NowThe taxation on Indian income in a foreign country for an OCI is totally dependent on the tax laws of the foreign country in which the OCI is a citizen. In normal cases, there is a minimum number of days that you need to spend in a country to be its resident, and then taxation on the worldwide income is applied.
Some countries have different rules for taxation, such as the USA. According to the USA taxation rules, citizenship-based taxation is applied. It says that a US citizen(green card holder) is taxed on their worldwide income, irrespective of the place they have stayed during the year.
For all the OCI living in India, they should check with a CPA (Certified Public Accountant) in their country of citizenship and see if such a rule exists in their country or not. If it exists, then they have to file an income tax return in that country for the Indian income they earn and pay taxes on that. Although they can claim DTAA benefits on this to avoid double taxation.
For OCIs, the tax return provisions are the same as those of a resident of India. If the taxable income of the individual with OCI status exceeds the basic exemption limit of 2.5 lakhs, then they have to pay taxes and file a tax return in India.
If the income of an OCI is less than the basic exemption limit, but they have any foreign income/assets with them, then they need to file an ITR in India. They must select those ITR forms that contain Schedule FSI and FA. These are filed to declare those foreign assets/income; otherwise, there will be penalties under Black Money Act.
As you must already know that as per Section 139A under the Finance Act, 2017, it is mandatory to link your Aadhaar with your PAN card and quote your Aadhaar in your Income Tax Return.
If you are wondering whether OCI living in India can obtain an Aadhaar or not, then yes, they are eligible to get an Aadhaar card. The eligibility criteria to obtain an Aadhaar for yourself are that you must have stayed in India for 182 days in the past 12 months. This is the only condition for applying for an Aadhar card, so if you follow this criterion, then you can obtain one for yourself.
One more important thing to note is that, for OCIs, it is important to link their Aadhaar cards with their PAN cards. Under the requirement of 139A, OCIs must do Aadhaar PAN linking and quote their PAN card in the income tax return in India.
As per the rules of FEMA, the OCI living in India qualifies as a "resident," and they can only open a resident savings account and a current account. These types of OCIs are not eligible to open non-resident accounts, such as NRE, NRO accounts, etc.
If an OCI had any NRE account or FCNR FD and then returned to India after some time, then he/she can maintain their FDs until they mature, but they cannot renew them.
These OCIs can open an RFC account and use it to credit any foreign income they receive from their investments, and it can also be easily repatriated outside India. Also, the OCI cards can work as a valid identity proof for opening bank accounts, Mutual funds KYC, etc.
The OCIs can invest in mutual funds only from their savings/current bank account, and they have to do a KYC first for that. If the existing KYC has a different citizenship from now, then the individual has to do a fresh KYC with all the updated details.
This KYC will automatically get updated across all Asset Management Companies (AMCs). They do not have to update the details with each AMC individually. After the KYC is completed, they can easily invest in mutual funds online.
As you know, an OCI is considered a resident of India as per the rules of FEMA, and hence, he can send the funds outside India for permitted capital/current account transactions. The amount of remittance should be within the LRS limit of USD 2,50,000 in a financial year.
If you want to remit an amount that is greater than the LRS limit, then you would need RBI approval, and you have to provide strong reasons for it. Also, you may be required to fill out the Form 15CA and 15CB and submit them to the bank for sending money outside India.
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Chat NowFor the OCI living in India, the taxation can be complicated to understand. As non-compliance can lead to legal complications and penalties, it is important to follow the Tax and FEMA regulations. You can seek expert guidance for understanding and following the ITA and FEMA rules. There are many online service providers available on the internet to help you out. One of the most trusted platforms is Visament. We have a team of professionals with 30+ years of experience. They have in-depth legal knowledge and can help you in filing the ITRs for your Indian and Foreign Income.
You can get 24/7 customer assistance on our platform at very affordable prices. Our agents are very helpful and patient. We also provide customised services for your individual requirements.
A PIO/OCI becomes an eligible tax resident of India if they meet the specific criteria based on the number of days they have stayed in India. They have to stay at least 182 days in the past 12 months.
No, the OCI/PIO does not have to declare the foreign bank account in India, as they are still considered foreign nationals.
Yes, the OCI/PIO needs to convert their NRE account to a resident savings account after becoming a resident of India. They can also transfer the funds to an RFC account.
It totally depends on the residential status of the OCI living in India. For ROR, the global income is taxable in India, and for NR or RNOR, the foreign income is generally not taxable in India.
Yes, the definition of residency is different according to FEMA and ITA. The basic criteria are 182 days of stay in India in the past 12 months, but the key difference is the purpose and intention of the stay.
Yes, the sales of foreign property in India are taxable for PIO/OCI. Taxability totally depends on the residential status of the OCI living in India. For NR or RNOR, it is not taxable in India, and for ROR, it would be taxable.
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