NRI vs OCI

NRI (Non-Resident Indian) and OCI (Overseas Citizen of India) are two distinct statuses that individuals can hold in relation to their connection with India. While both categories involve Indians living abroad, there are significant differences in their legal status, rights, and obligations. Understanding these two categories is important if you have ties to India but are living abroad.

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

Who are NRIs?

A Non-Resident Indian (NRI) is an Indian citizen who resides outside of India for at least 182 days in a financial year but maintains significant connections to their home country.

Despite living abroad, NRIs often maintain close ties with India through their family, investments, properties, or other interests. They may also actively participate in Indian cultural, social, or economic activities.

The term "NRI" is commonly used to categorize and identify Indian citizens living abroad while emphasizing their continued association with India.

Who is an OCI?

An Overseas Citizen of India (OCI) refers to an individual who holds an OCI card and is considered an overseas citizen in layman's terms. An OCI is not a citizen of India, but rather someone who has been granted permission by the Indian government to reside and work within the boundaries of India.

The OCI card is issued to individuals who have a foreign nationality but have a significant connection to India, such as being of Indian origin or having Indian ancestry. This card grants certain rights and privileges to the cardholder while they are in India, including the ability to live, work, and study in the country without the need for a visa. Once an OCI card is issued, it does not expire and is eligible to remain valid for the whole life span of the cardholder.

Who Cannot be an OCI Cardholder?

Individuals migrating from Pakistan and Bangladesh are ineligible for obtaining the OCI card, even if their parents hold citizenship in both countries.
Those who have served in the military of foreign countries are not eligible to receive the OCI card.
OCI cardholders, who work and earn income within India, are permitted to open special bank accounts at bank branches of Indian banks.

Note: The constitution of India does not permit dual citizenship, which is why the OCI card was introduced as a solution.

What are the Benefits and Limitations of Being an NRI or OCI Cardholder?

For NRIs

Benefits	Limitations
You have access to exceptional overseas accounts.	You are not eligible for purchasing agricultural land within Indian territory.
The Indian education system grants you a special reservation quota.	Your income earned within India will be taxable.
You are eligible to be a voter in Indian elections.	-
Income earned outside India will not be taxed unless you receive the payment within India.	-

For OCI Cardholders

Benefits	Limitations
You have the privilege of enjoying lifelong multiple entries for visiting India.	You are not eligible for purchasing agricultural land.
You are not required to register with local police authorities after 180 days.	You are not eligible for a government job.
You do not need special permission to work and study in India.	You are not allowed to participate in Indian elections.
You receive similar benefits as NRIs (Non-Resident Indians) in terms of financial and educational opportunities.	-

What is the Difference Between OCI and NRI?

Here's a table highlighting the key differences between OCI (Overseas Citizen of India) and NRI (Non-Resident Indian):

Criteria	NRI	OCI
Definition	NRI stands for Non-Resident Indian, referring to an Indian citizen who resides outside India for employment, business, or other purposes. It is a residential status designed by the Income Tax Department of the Indian government.	OCI is an immigration status or special visa provided to foreign nationals of Indian origin by the government to work or live indefinitely.
Residency	Resided in India for less than 182 days	No residency requirement
Classification	Automatic classification as an NRI	Application process required for OCI card
Taxation	Income earned in India is taxable in India	Liable for taxation on global income as per DTAA
Duration	No specific duration, based on residency	Valid for an indefinite period
Application Process	No specific application process	Application required through Government of India online portal, with processing time of 30 days
Required Documents	Overseas residential proof	Proof of current citizenship, evidence of Indian origin, relationship evidence (if applicable), photograph, thumb impression, and signature
Financial Investments: Can invest in various financial opportunities in India Property Investments: Can invest in residential/commercial properties, but not agricultural or plantation property or a farmhouse

NRI Bank Account vs OCI Bank Account

India offers specialized bank accounts and deposits tailored for non-residents and individuals who wish to maintain strong ties with the country. These accounts provide options for safeguarding and growing their finances. The three main types of accounts available to non-residents are:

Non-Resident Ordinary Accounts (NRO)
Non-Resident External Accounts (NRE)
Foreign Currency Non-Resident (Bank) Accounts {FCNR(B)}

**The accounts and eligibility criteria are the same for everyone, whether the individual is an NRI or an OCI cardholder.

The following section will provide a clear understanding of which individuals are authorized for specific accounts:

NRIs are permitted for opening NRO, NRE, and FCNR(B) accounts.
OCI cardholders are permitted for opening NRO, NRE, and FCNR(B) accounts. They are also permitted for opening domestic accounts in some instances.
Foreign Nationals who are employed in India can open domestic bank accounts. However, they are not permitted to open NRO, NRE, and FCNR(B) accounts.
International students studying in India are permitted to open NRO accounts. They are not eligible for opening domestic accounts, NRE, and FCNR(B) accounts.
Foreign tourists on a visiting trip to India are eligible to open an NRO account. However, they do not qualify for opening domestic accounts, NRE, and FCNR(B) accounts.

Wrapping It Up!

The Indian government has been designing and introducing different measures for non-residents to feel free to work and reside in the country. However, every individual planning to migrate must know the standards and features to keep their roots intact and have a humble connection between their residing country and their ancestral country.

FAQ's

What is the main difference between NRI and OCI?

The main difference between NRI and OCI is their citizenship status. NRIs are Indian citizens living abroad temporarily, while OCIs are foreign citizens who have acquired the status of Overseas Citizens of India.
Can NRIs hold Indian citizenship?

Yes, NRIs are Indian citizens. They hold Indian passports and have the right to vote in Indian elections.
Can OCIs hold Indian citizenship?

No, OCIs are not Indian citizens. They hold a special status that grants them certain privileges, but they are not considered Indian citizens.
How can an Indian citizen become an OCI?

Indian citizens cannot directly become OCIs. Only individuals who are of Indian origin or descent and hold citizenship of another country are eligible to apply for OCI status.
As an OCI can I opt for ULIP in India?

Yes, you can opt for ULIP (Unit Linked Insurance Plan) in India as an OCI (Overseas Citizen of India). ULIPs are a type of life insurance plan that combines life insurance with investment. They offer the benefits of both life insurance and investment, and can be a good option for NRIs who want to protect their families and grow their wealth.
Can NRI / OCI opt for Life Insurance in India?

Yes, NRIs (Non-Resident Indians) and OCIs (Overseas Citizens of India) can opt for life insurance in India. Life insurance can provide financial security for your family in case of your death, and can also help you save for your retirement. There are a variety of life insurance plans available for NRIs and OCIs, so you can choose one that meets your specific needs.
Do I need to pay GST if I buy Life Insurance from India?

There are some exemptions to the GST on life insurance. For example, if you are buying a life insurance policy for your parents, you will not need to pay GST.
What are the documents NRIs require to invest in ULIPs in India?
The documents that NRIs require to invest in ULIPs in India include:
- Passport
- OCI card (if applicable)
- Proof of residence in the country of residence
- Proof of income

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-12-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).