For Overseas Indians

Who is an Overseas Citizen of India (OCI)?
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 or belonged to a territory that became part of India after 15.08.1947 and his/her children and grand children, is eligible for registration as an Overseas Citizen of India (OCI). Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen of Pakistan or Bangladesh he/she will not be eligible for OCI.
Who is a Non Resident Indian?
Section 2 of the Foreign Exchange Management Act, 1999 (FEMA) deals with various definitions. It defines a person resident in India and a person resident outside India. However, it does not define the term non-resident nor it does define the term Non Resident Indian(NRI). However, Notification No. 5/2000-RB (dealing with various kinds of Bank Accounts) defines the term Non Resident Indian (NRI) to mean a person resident outside India who is either a citizen of India or is a person of Indian origin. In short, the definition of the term NRI is contextual and can have slightly different connotations for FEMA/Income Tax/Acquisition of Immovable Property etc.
Who is a person resident in India?
Under the FEMA, a person resident in India means a person residing in India for more than 182 days during the course of the preceding financial year 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 per iod of stay (being more than 182 days during the course of the preceding financial year) but has to comply with the condition of purpose/ intention of stay.(For details see FEMA, 1999).

Who is a Person of Indian Origin (PIO)?
1. For the purposes of availing of the facilities of opening and maintenance of
bank accounts and investments in shares/securities in India;
Person of Indian Origin means any person: a) who at any time, held an Indian passport; or b) he/she or either of his/her parents or his/her grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955(57 of 1955) or c) the person is a spouse of an Indian citizen or a person referred to in clause (a) or (b) above.
2. For investment in immovable properties;
Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal or China or Iran):
a) who at any time, held an Indian passport or b) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955(57 of 1955)
3. For the purpose of PIO card scheme;
A foreign citizen if he/she at any time held an Indian Passport; or he/she or either of his/her parents or grand parents or great grand parents was born in and permanently resident in India as defined in the Government of India Act,1935 or his/her spouse (for details, see Chapter 5 on PIOs).
What is an Overseas Corporate Body (OCB)?
Prior to deletion of OCB as a class of investors with effect from September 16, 2003 the term .Overseas Corporate Body. was defined as a company, partnership firm, society and other corporate body wholly owned, directly or indirectly, to the extent of at least sixty percent by Non-Resident Indians and included overseas trusts in which not less than sixty percent beneficial interest is held by Non-Resident Indians, directly or indirectly but irrevocably.
However, OCBs which had prior to September, 16, 2003 availed of investment facilities under various schemes have general permission to continue to hold/transfer/gift (to Non Resident Indians/Residents in India) their existing investments in shares/convertible debentures/securities of Indian companies.
Indian companies can allot bonus shares accruing to the OCBs. Those which are incorporated in the host country and are not under adverse notice of RBI may be considered, for undertaking fresh investments, as incorporated non-resident entities by RBI/Government on case by case basis.
BANK ACCOUNTS
NRIs/PIOs are permitted to open bank accounts in India out of funds remitted from abroad, foreign exchange brought in from abroad or out of funds legitimately due to them in India.
Such accounts can be opened with banks specially authorised by the Reserve Bank in this behalf
[Authorised Dealers].
There are three types of Non-Resident accounts:
RUPEE ACCOUNTS
1) Non- Resident (External) Rupee Accounts (NRE Accounts)
NRIs and PIOs are eligible to open NRE Accounts. These are rupee denominated accounts. Accounts can be in the form of savings, current, recurring or fixed deposit accounts. Accounts can be opened by remittance of funds in free foreign exchange. Foreign exchange brought in legally, repatriable incomes of the account holder, etc. can be credited to the account. Joint operation with other NRIs/PIOs is permitted.
Power of attorney can be granted to residents for operation of accounts for limited purposes.
The deposits can be used for all legitimate purposes. The balance in the account is freely repatriable.
Interest lying to the credit of NRE accounts is exempt from tax in the hands of the NRI.
Funds held in NRE accounts may be freely transferred to Foreign Currency Non Resident (FCNR) accounts of the same account holder. Likewise, funds held in FCNR accounts may be transferred to NRE accounts of the same account holder.
2) Ordinary Non-Resident Account (NRO Accounts )
These are Rupee dominated non-repatriable accounts and can be in the form of savings, current, recurring or fixed deposits. These accounts can be opened jointly with residents in India. When an Indian National /PIO resident in India leaves for taking up employment etc. outside the country, other than Nepal or Bhutan, his bank account in India gets designated as NRO account.
The deposits can be used to make all legitimate payments in rupees. Interest income from NRO accounts is taxable. Interest income, net of taxes is repatriable. Authorised dealers may allow remittances upto US $ 1 million, per calendar year, out of balances held in NRO account for any bonafide purpose.
FOREIGN CURRENCY ACCOUNTS
3) Foreign Currency Non Resident (Bank) Accounts (FCNR (B) Accounts)
NRIs/PIOs are permitted to open such accounts in US dollars, Sterling Pounds, Japanese Yen, Euro, Canadian Dollars and Australian Dollars. The accounts may be opened in the form of term deposit for any of the three maturity periods viz; (a) one year and above but less then two years (b) two years and above but less then three years and (c) three years only. Now RBI has allowed banks to accept FCNR (B) deposits upto maximum maturity period of five years.
Interest income is tax free in the hands of the NRI until he maintains a non-resident status or a resident but not ordinarily resident status under the Indian tax laws.
FCNR (B) accounts can also be utilised for local disbursement including payment for exports from India, repatriation of funds abroad and for making investments in India, as per foreign investment guidelines.

Handbook for Overseas Indians
Ministry of Overseas Indian Affairs