INTRODUCTIONThe Overseas Citizen of India or OCI was a modified form of dual citizenship introduced by the Indian Government in 2005 for the benefit of Non-Resident Indians (NRIs) and Persons of Indian Origins (PIOs) resident abroad. India currently does not permit dual citizenship, i.e., a person cannot be the citizen of both India and a foreign country, say the USA. He must select any one. An OCI cardholder is not a full-fledged citizen but he has certain benefits at par with a citizen. As of 2020, there were over six million OCIs abroad.
This scheme has seen certain regulatory and legal developments which have caused a great deal of confusion and anxiety amongst the OCI cardholders resident abroad. The University of WhatsApp (sic!) has played a stellar role in fuelling this fire. The intent of this article is to discuss those forwards and dispel some myths.
WHAT IS REGULATORY FRAMEWORK?
An OCI card is granted by the Government of India to a person under the aegis of the Citizenship Act, 1955. Section 7A of this Act provides for the registration of OCIs. At the cost of repetition, an OCI is not a full-fledged Indian citizen under the Citizenship Act but he is only registered as an OCI. Section 7A allows the Government to register the following individuals as OCIs on an application made by them:
(a) Any person who currently is a foreign citizen but was an Indian citizen at the time of commencement of the Constitution of India, i.e., in 1950;
(b) Any person who currently is a foreign citizen but was eligible to be an Indian citizen at the time of commencement of the Constitution of India, i.e., in 1950;
(c) Any person who currently is a foreign citizen but belonged to a territory that became part of India after Independence;
(d) Any person who is a child or a grandchild of the above persons;
(e) A minor child of a person mentioned in the clause above;
(f) A minor child both of whose parents are citizens of India or one of whose parents is a citizen of India;
(g) Spouse of a citizen of India or spouse of an Overseas Citizen of India cardholder;
(h) Spouse of a person of Indian origin who is a citizen of another country and whose marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the presentation of the application under this section.
Thus, all of the above persons are eligible to be registered as OCIs. Interestingly, even a person of non-Indian origin can be registered as an OCI if he marries a citizen / an OCI cardholder. For example, a Caucasian American man marries an Indian OCI woman residing in the USA. He, too, would be eligible to be registered as an OCI along with their children. The Act further provides that the OCI card granted u/s 7A to a spouse is liable to be cancelled upon dissolution of marriage by the competent court. The special privileges can then be withdrawn.
The Bombay High Court in Lee Anne Arunoday Singh vs. Ministry of Home Affairs, WP 3443/2020 has held that the provisions of section 7 of the Act cast a duty on the Government to take necessary steps regarding cancellation of the OCI card issued on spouse basis, if the marriage is dissolved by a competent court of law.
The Government of India has recently made a submission in a similar case before the Delhi High Court that a foreigner registered as an OCI on the strength of marriage to an Indian citizen loses that status when the marriage is dissolved. Such foreigners are no longer eligible to be registered as OCIs under the Citizenship Act. Such a person could, however, continue to visit India by applying for an ordinary / long-term visa. A PIL (public interest litigation) has also been filed before the Delhi High Court in Jerome Nicholas Georges Cousin vs. Union of India, W.P. (C) 8398/2018 by a French national against this provision. In his plea he states that he would have to close down his business and go back to France since he would now not have permission to run a business in India.
WHAT ARE THE BENEFITS AVAILABLE TO AN OCI?
The OCI card is a life-long visa granted to these foreign citizens. While their passport is the primary document to enter India, the OCI card is an additional document that they receive. They can visit India as many times as they want and stay as long as they wish. They can even permanently reside in India and work and study here. Non-OCI cardholders need to get registered with the Foreigners Regional Registration Office if they want to stay for more than six months in India. These procedures are not applicable to OCIs.
Earlier, there was a concept of a Person of Indian Origin (PIO) card which was also a long-term visa. However, issuance of new PIO cards has been discontinued and all PIO cardholders are being encouraged to migrate to the OCI card.
The Government has made some changes in the benefits available to OCIs by a Notification issued in March, 2021. This Notification has caused a lot of confusion amongst the Indian diaspora. The revised list of benefits available to OCIs is as follows:
(1) It grants a multiple entry life-long visa for visiting India for any purpose. The revised Notification has added that for undertaking the following activities, the OCI cardholder shall be required to obtain a special permission or a Special Permit, as the case may be, from the competent authority or the Foreigners Regional Registration Officer or the Indian Mission concerned, namely:
(i) to undertake research;
(ii) to undertake any missionary or tabligh or mountaineering or journalistic activities. This amendment is to overrule the Delhi High Court’s decision in the case of Dr. Christo Thomas Philip vs. Union of India, W.P. (C) 1775/2018 where an OCI card was cancelled on the ground that the person was involved in missionary activities in India. The Court held that there is no law which prevents missionary activities by an OCI and hence the cancellation was invalid. The Court had held that prima facie the rights under Article 14 (equality before law) and 19 (freedom of speech and expression) of the Constitution of India which are guaranteed to the citizen of India, also appear to be extended to an OCI card-holder;
(iii) to undertake internship in any foreign Diplomatic Missions or foreign Government organisations in India or to take up employment in any foreign Diplomatic Missions in India;
(iv) to visit any place which falls within the Protected or Restricted or prohibited areas as notified by the Central Government or competent authority.
(2) Exemption from registration with the Foreigners Regional Registration Officer or Foreigners Registration Officer for any length of stay in India. The revised Notification has added that the OCI cardholders who are normally resident in India shall intimate the jurisdictional Foreigners Regional Registration Officer or the Foreigners Registration Officer by email whenever there is a change in permanent residential address and in their occupation.
(3) It provides parity with NRIs in the matter of
(i) inter-country adoption of Indian;
(ii) appearing for the all-India entrance tests to make them eligible for admission against any NRI seat. However, the OCI cardholder shall not be eligible for admission against any seat reserved exclusively for Indian citizens. This overrules the decision of the Karnataka High Court in the case of Pranav Bajpe vs. The State of Karnataka, WP 27761/2019 which held that when the parity between the OCI cardholder and Non-Resident Indians is removed, the concept of OCI cardholder cannot be given a restricted meaning as Non-Resident Indian so as to restrict such admission only to Non-Resident Indian quota in the State quota of seats and not in the institutional quota or Government quota of seats under the NEET Scheme. It had concluded that the minor children of Indian citizens born overseas must have the same status, rights and duties as Indian citizens, who are minors;
(iii) purchase or sale of immovable properties other than agricultural land or farmhouse or plantation property; and
(iv) pursuing the following professions in India as per the provisions contained in the applicable relevant statutes or Acts as the case may be, namely, doctors, dentists, nurses and pharmacists; advocates; architects; chartered accountants.
(4) In respect of all other economic, financial and educational fields not specified in this Notification or the rights and privileges not covered by the Notifications made by the Reserve Bank of India under the Foreign Exchange Management Act, 1999, the OCI cardholder shall have the same rights and privileges as a foreigner. This is a new addition by the March, 2021 Notification. Thus, if any benefit is not specifically conferred either under the Citizenship Act or under the FEMA, 1999, then the OCI would only be entitled to such privileges as are available to a foreigner.
An OCI is not entitled to vote in India, whether for a Legislative Assembly or Legislative Council, or for Parliament, and cannot hold Constitutional posts such as those of President, Vice-President, Judge of the Supreme Court or the High Courts, etc., and he / she cannot normally hold employment in the Government.
CAN AN OCI BUY PROPERTY IN INDIA?
One of the benefits of being an OCI is that such a person can buy immovable property in India other than agricultural land. The Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 deal with this aspect. Rule 21 permits an OCI to purchase any immovable property in India other than agricultural land or farmhouse or plantation property. An OCI is also allowed to get a gift of such a property from an Indian resident / NRI / OCI who is a relative as per the definition under the Companies Act, 2013. Citizens of certain countries, such as Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or Macau, or the Democratic People’s Republic of Korea (DPRK), cannot purchase immovable property in India without permission from the RBI but even this prohibition is not applicable to OCI cardholders. It may be noted that the above relaxations under the FEMA Rules are only for OCI cardholders and not for all persons of Indian origin. If a foreign citizen of Indian origin does not have an OCI card, then he cannot buy immovable property in India without prior permission of the RBI. This is one of the biggest benefits of having an OCI card.
In this respect, misunderstanding of a Supreme Court decision in Asha John Divianathan vs. Vikram Malhotra, CA 9546/2010 Order dated 26th February, 2021 has created great heartburn amongst the OCI community. This was a decision rendered under the erstwhile Foreign Exchange Regulation Act, 1973 (which has been superseded by the FEMA in 1999). Section 31 of the erstwhile law provided that any foreign citizen desirous of buying immovable property in India required the prior approval of the RBI. The Court held that entering into any such transaction without RBI approval was treated as an unenforceable act and prohibited by law. It further held that when penalty was imposed by law for the purpose of preventing something on the ground of public policy, the thing prohibited, if done, would be treated as void, even though the penalty if imposed was not enforceable. It is important to note that this decision is not applicable in the light of the current provisions of the FEMA Regulations. As explained above, the law now, by virtue of Rule 21 of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 expressly provides that an OCI can purchase any immovable property in India other than agricultural land or farmhouse or plantation property.
WHAT DOES FEMA PROVIDE IN RESPECT OF OCIs?
The provisions relating to OCIs have been dealt with in great detail under the FEMA Regulations and it would be difficult to elaborate on all of them here. However, a few examples are explained here. At most places under the FEMA Regulations, the provisions available to persons of Indian origin have been replaced with OCIs. Thus, it is mandatory for the PIOs to have an OCI card. For instance, the facility of investment on a non-repatriable basis under Schedule IV of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 is allowed only to Non-Resident Indians and OCI cardholders. Persons of Indian origin who do not have OCI cards cannot avail of this facility.
Similarly, under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 an Indian bank is allowed to lend in Indian rupees only to an NRI or an OCI cardholder.
However, in a few Regulations under FEMA, it is not mandatory to have an OCI card. For example, a Non-Resident External (NRE) Bank Account or a Non-Resident Ordinary (NRO) Bank Account can be opened by any Person of Indian origin. It is not necessary that such a person has an OCI card. Similarly, the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 allows a PIO to remit up to US $1 million every year out of balances held in the NRO account and from the sales proceeds of assets.
IS THE DEEMED RESIDENCY PROVISION APPLICABLE?
Under section 6 of the Income-tax Act, any Indian citizen having total Indian income exceeding Rs. 15 lakhs during the previous year is deemed to be an Indian tax resident in that year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. This provision is applicable only to an Indian citizen, i.e., a person holding an Indian passport. An OCI does not have an Indian passport and so he would be out of the deemed taxation net.
CONCLUSION
The law relating to OCIs is dynamic in nature. In respect of all other economic fields not expressly specified or not covered by the Notifications under the FEMA, 1999, the OCI cardholder is equated with the same rights and privileges as a foreigner. Thus, it becomes very important to understand what are the benefits and provisions for an OCI cardholder.
