FAQ on Residential Status

FAQ on residential Status

Who is a person Resident in India?

Under FEMA, a person resident in India is defined as a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year (April to March) and who has come to or stays in India either for taking up employment, carrying on business or vocation in India or for any other purpose, that would indicate his intention to stay in India for an uncertain period.

In other words, to be treated as ‘a person resident in India’ under FEMA, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of the preceding financial year) but has also to comply with the condition of the purpose / intention of stay.

How to identify if a person is Resident in India or not?

Reserve Bank does not determine the residential status. Under FEMA, residential status is determined by operation of law. The onus is on an individual to prove his / her residential status, if questioned by any authority.

Who can purchase immovable property in India?

Under the general permission available, the following categories can purchase immovable property in India:

Non-Resident Indian (NRI)

Person of Indian Origin (PIO)

The general permission, however, covers only purchase of residential and commercial property and is not available for purchase of agricultural land / plantation property / farm house in India.

Who is a Person of Indian Origin (PIO)?

Person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan or Sri Lanka, if:

  • He at any time held an Indian passport.
  • He or either his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
  • The person is a spouse of an Indian citizen.

Who is a Overseas Citizen of India (OCI)?

Overseas Citizen of India Cardholders registered as such under a Notification issued by Central Government are deemed to be Overseas Citizen of India cardholders.

A foreign national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen of India on or at any time after 26.01.1950 and his / her children and grand children, provided his / her country of citizenship allows dual citizenship in some form or other under the local laws, is eligible for registration as an Overseas Citizen of India (OCI). Minor children of such person are also eligible for OCI.

The applicant for OCI does not lose his citizenship he currently has. As only citizen of the country which allows dual citizenship under the local laws in some form or the other are eligible for applying for registration as an OCI, losing foreign citizenship does not arise.

If the foreign citizen, who obtains OCI, intends to obtain Indian citizenship, if he holds OCI for 5 years and is residing in India for 1 year out of the above 5 years, he is eligible to apply for Indian Citizenship.

The benefits of obtaining an OCI are:

(a) Multi-purpose, multiple entry, lifelong visa for visiting India.

(b) Exemption from registration with local police authority for any length of stay in India.

(c) Parity with NRIs in respect of economic, financial and education fields except in matters relating to the acquisition of agricultural / plantation properties.

A OCI Card holder can renounce such status when he intends to do so.

What are the differences between OCI and POI cards?

  • A PIO card is valid for 15 years as against lifetime validity for OCI and hence the lifelong visa is available for OCI cardholders.
  • A PIO cardholder is required to register with local Police authority for any stay exceeding 180 days in India on any single visit whereas an OCI is exempted from registration with Police authority for any length of stay in India.
  • An OCI gets a specific right to become an Indian Citizen on holding 5 years of OCI card and staying in India for 1 year, whereas the PIO card holder does not have this.
  • PIO cards are reissued after 15 years as they are valid for 15 years and OCI is a lifelong validity.
  • The eligibility to invest in certain types of assets will be based on being PIO and not holding a OCI. Further OCI can be considered as a travel document for visa free travel.

What are tax incidence of a Non- Resident in India?

The Non-resident is chargeable to tax in India with respect to 1. Income received or deemed to be received in India by him or on his behalf. 2.Income accrues or arises or deemed to accrue or arise in India to him.

What are the incomes deemed to accrue or arise in India?

There are certain incomes which actually may arise or accrues to a non-resident outside India but under the Indian Tax Laws such incomes are deemed to accrue or arise to such non-resident in India and is subjected to tax in India. The following income are deemed to accrue or arise in India in the hands of all assesses (including Non resident) irrespective of their residential status.

(i) Income from any Business connection in India

(ii) Income from any Property, Asset or sources of Income in India

(iii) Capital gain on a transfer of a capital asset situated in India.

(iv) Income from salary if Services are rendered in India.

(v) Income from salary for the services which are rendered outside India provided that Employer is GoI and employee is a citizen of India.

(vi) Dividend paid by an Indian Company

(vii) Income by way of fees for technical services payable by The Govt, a Resident India or a Non-resident Indian.

If you want to file your tax returns in India, write to us at [email protected]