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FEMA Tax Rules for OCI Holders Who Return from the US

FEMA Tax Rules for OCI Holders Who Return from the US

Over 85K Indians apply for the visa of the US. This number of visa applicants is increasing year after year.

The taxation rules for Indians living in the USA are applicable as per the residency status. Like goers, there are non-residents of India, including OCI card holders & PIOs who return temporarily or permanently.

This blog defines how taxation rules are applied to them.

NRIs, including OCIs and PIOs in the USA Vs NRIs in India

According to US tax laws, migrants or non-residents are classified as aliens. A migrant who is not a US citizen becomes a “Resident Alien” if he or she attains permanent residency or successfully appears through the substantial presence test.

Here in India, Foreign Exchange Management Act (FEMA) recognises a person resident in India (who stays here for 182 days or more) and a person resident outside India, covering NRIs, OCIs, and PIOs.

Treatment of Person Resident Outside India in India

Those who have obtained a green card in the US are categorised as a Person Resident Outside India.

Since they stay outside India for an uncertain period, their existing Indian bank accounts (covering joint accounts) are turned into Non-Resident (Ordinary) or NRO accounts. This status enables them to remit foreign income into this bank account to receive it in Indian currency, i.e. INR.

But, they won’t allow repatriation to accounts overseas. On the flip side, NRIs have a right to remit up to $1 million overseas every FY from this account.

There is another account called Non-Resident (External) Account or NRE, which NRIs can have for depositing their income to use in India or abroad.

How does the Indian Taxation Act Treat Indian Migrants?

According to Indian Taxation rules, any India shifting to the USA is treated as a Resident & Ordinarily Resident (ROR), a Resident but Not Ordinary Resident (RNOR), and Non-Resident (NR).

The NR is the one who has been here for 182 days or more in India. Or, he should have been here for 365 days in the immediate four preceding years. Or, it can be 60 days more in the relevant financial year.

Once it is confirmed that the person is a Resident, further categorization (which is into ROR or RNOR) takes place under the law.

If one is categorised as ROR, his global income shall be taxable. On the other hand, RNOR and NR can enjoy the benefit of paying tax on only India-sourced income. Out of these two, only NRI can file for an Income tax return if being taxed on India-sourced income.

A person shifted to the US will be treated as a non-resident, supposing that his stay in India does not exceed 182 days. In this case, he shall have to pay tax in India only. It will be on the Indian-sourced income.

If an Indian migrant receives a salary in an Indian bank account while working in the US, no tax will be applicable. It is clearly because he received it in India.

Different Treatment of Status as per Domestic Law

This happens when the person attains citizenship in both countries. Typically, the tax shall be paid to the resident country. But technically, both countries impose a tax on international income.

But, this may arise the problem of double taxation. It can be administered through a “Tie Breaker Rule”. India and US Double Taxation Avoidance Agreement allow it.

If a person returns to India and remains a resident alien, the US rules will be applicable. It won’t matter if he lives here or in the USA because his income will be treated as global income. It is subject to the US income tax.

If the returned person from the US holding its citizenship and have a financial interest in or signatory or any operating authority over multiple financial accounts located outside the USA, plus the aggregate amount in all foreign financial accounts is $10,000+ at any time during the financial year, he has to file FBAR (Report of Foreign Bank and Financial Accounts) in addition to the FATCA (Foreign Account Tax Compliance Act) requirements.

The exchange control requirements in India ensure designating NRO, NRI accounts to those who want to stay here for an uncertain period.

In that case, he will have to file an ITR upon being here in India. In the case of ROR, only the global income is taxable. Such residents shall claim the foreign tax credit for the tax paid in the USA. To get this benefit, the ROR (but not RNOR and NR) has to share detailed reports of foreign bank accounts and assets in the ITR. In case he does not share, he shall be penalized worth INR 10 lakhs under the Black Money & Imposition of Tax Act 2015, which is for undisclosed foreign income & assets.

Visa Free Travel Restored for OCI Card Holders in US, UK, France

Visa Free Travel Restored for OCI Card Holders in US, UK, France

Indian government has restored suspended OCI benefits for Indian-Americans to enjoy visa free traveling across India.

Uplifted Ban on Visa Free Travel for OCIs

After a long spell of drastic pandemic COVID-19 outbreak, Indian government has lifted the ban on OCI card holding Indian-Americans. They can now enjoy visa free traveling across the country. The related community has been passing through ordeals in getting visa for being suspended Overseas Citizens of India services.

This card has been allowing lifelong visa free ride across this country with some restrictions for the people of this origin. Earlier, this facility was paused on April 11 amidst a nationwide lockdown and travel restrictions to break the chain of highly contagious virus.

The decision came out of blues, which creates chaos all around. The affected NRI diaspora faced off anxiety, which took them to social media like Twitter and Facebook for protesting against this decision. The media channels were flocked with narratives of this community, which is undergoing severe pain and trauma because of ceasing this service.

However, these people do not have a complete relaxation, as a few travel restrictions on those who have OCI cards were lifted. This has been so far applied to some emergency categories, which include those who travel for employment or some minors whose parents are Indian natives.

In the first week of August 2020, the Ministry of Home Affairs proclaimed about the restoration of the full travel privileges for overseas citizens of India, who have passport of the USA, the UK, Germany and France. This is done under an “Air Bubble” arrangements (which are also called bilateral air travel arrangements) with all these countries.

The affected community has been waiting for this decision for a long time. This is going to heal them a little bit and minimise their harassment to a great extent.  A few of those who have been using the OCI card for past several years recalled that the abruptly banning led to a lot of heartburns among people in Indian diaspora because it was their native country where they could take shelter.

Upon Lifting Ban

The restored service has enabled free traveling for Indian-Americans, which is a great facility to exchange regards between these two countries, according to Alok Kumar- former president of the Federation of Indian Associations of the tri-state area of New York, New Jersey and Connecticut.

NRIs Reaction

New Jersey-based social activist Deepender Singh was happy to listen to this great news for overseas citizen of india card holder, as the Indian government has seriously thought about the need for relaxation of visa and travel restrictions for more categories of NRIs who want to visit India and their relatives in different states. These are many from the US, the UK, Germany and France.

The ministry has announced that the air bubble scheme is going to be executed in more countries soon. The non-resident community has welcomed this decision, calling it the air bubble opportunities.

Role of Indian Missions
The Indian missions located in the US, the UK, Germany and France will encompass the air bubble arrangement, granting appropriate and quick visa to those who have related documents and have no adverse things corresponding to the arrangement.

It’s a big sigh of relief from the government of India, which has uplifted all travel sanctions on OCI card holders.

How OCIs/PIOs Renew Green Card in US for Permanent Residence?

How OCIs/PIOs Renew Green Card in US for Permanent Residence?

Nostalgia catches several expats. They magnetize towards their home, people, culture, and kith & kin. Eventually, they return to their home town.

A person gave up his US residency three decades ago. But later on, he wanted to make a comeback. It was possible but he has to go through the entire procedure of getting a green card from scratch. However, his old card had no expiry date. But since three decades passed while leaving the USA, it was cancelled.

That was just an incident. There are many more reasons when you require renewing the green card. Let’s catch a look over all those ones:

When do you require renewing green card?

  1. When the 10 year long validity of your green card is likely to expire.
  2. When your previous card was stolen, burnt, mutilated, destroyed or lost.
  3. When you did not receive your previously applied green card.
  4. When you’re going to be 14 years old by birth.
  5. When you want to end up being a commuter & willing to settle as the permanent resident of the USA.
  6. When you’re willing to replace permanent resident status with the commuter.
  7. When your green card reads incorrect or incomplete biographic details that you’ve revised through the court, like change in the name or get married.
  8. When your status of an expat meets the legitimacy to get the green card automatically.
  9. When you’re a permanent resident and your previous version of card is expired. It composes the ones who have applied for Form AR-3, Form AR-103 and Form I-151 with the USCIS.

How can you renew the Green Card?

  1. The residents (living inside the USA) can apply to replace the green card with the USCIS & pay via its lockbox in the Phoenix DC AZ. Or,
  2. The permanent residents living outside, like PIO or OCIs, can contact the nearest consulate office of America. Afterwards, they can fill the Form I-90.
  3. Fill the Form I-90.
  4. Enclose the documents:
  • Original permanent resident card unless it is stolen, lost, destroyed, mutilated, or never received.
  • Submit the copy if the original documents are unavailable at the immigration
  • If you’re 18+ years old & don’t have the copy or original, attach the photocopy of your identity proof. It can be your driving licence, photocopy of the passport or any other one that wears your date of birth, name, photograph and signature.
  • Submit two photographs of 2”X2” of dimensions within 30 days of filling Form I-90 (an application to replace a permanent resident card). It should have no formatting or editing. On the flip side of these photographs, write your alien registration number with a pencil.

(The alien registration number in the United States is popularly known as Form I-551. It represents the green card or a permanent residence card. It can be served as a permit to work and live permanently in the United States.)

  • If you’re likely to renew this card after getting 14 years old, you must be fingerprinted with the USCIS. It will let you know when and where you can go for your fingerprinting.
  • Another reason for the renewal of this card is to update the biographic data. As happens in India, you must submit the licit proof, like marriage certificate or affidavit of single status certificate or affidavit for changing the biographic persona. Enclose the proofs with explanation as the USCIS authority requires it.
  1. If you’re applying as being a commuter, you can apply for the temporary proofs of your permanent residence and also the travel or employment proofs. They will be really helpful if you’ve lost your original proofs. Afterwards, you can apply for the renewal via Form I-90.

How can you know the decision of the USCIS over your application for replacing green card? 

The immigration authority will notify you via mail or in writing. You need to fill the Form I-89 which would be your data collection card. If it is approved, the authority will process & deliver your green card.

If it is rejected, you can re-appeal for the same. The reasons of rejection can be incomplete or wrong data in the form. And sometimes, it can be the flaw of officials.

The applicant can identify the error in the form as the authority mentions it in the rejection letter.  At that time, you can appeal through a motion to reopen. Provide the facts correctly with the reasons of correction.

If there was no mistake and it was the fault of the authority, you can go for the ‘motion to reconsider’.

PIO to Convert Into OCI for Admission in Deemed Varsities

PIO to Convert Into OCI for Admission in Deemed Varsities

It’s really interesting to know that around 30+ million Indians live abroad. Out of them, 17,835,407 expats are PIOs whereas 13,008,012 form non-residents’ diaspora, according to the Ministry of External Affairs.

31st December 2017- Last date for PIO to OCI Conversion:

The PIO concept is fading out of the immigration mirror. The Modi-led Indian government had announced for the merger of PIO cards into OCIs in 2014. While taking the benefits of latter card into account, the government introduced this change.  This decision was composed to dispel the confusion over the usage of both cards.

PIO or Person of Indian Origin Card was launched in 2005 with its validity timeline of 15 years. Its holders could travel, work and even reside in India till the end of 15 years.

On the flip side, OCI or Overseas Citizen of India Card came with great package of benefits & value additions for the expats of Indian origin. Their travel across Indian Territory would be valid till lifetime. No specific visa would need to be taken for meaningful visit, like gaining education or professional training. The benefits of this card are far more than that of former card. This is why PIO to OCI conversion is made mandatory.

This is the 4th time when Indian PM extended the due date for the conversion of the PIO card. There are many Indians who serve their duties in Israel, China, Malaysia and many other countries. Their responsibilities regarding job and other factors cause delays in this conversion. This is why the due date is extended so that the expats from India can get it converted during the extended period.

Allowed OCI Students to Take Admission in Medical:  

The conversion of PIOs into OCIs will definitely be a silver lining for the NRI aspirants who want to take admission in the medical field.  Recently, the Karnataka High Court granted admission of the OCI students to the undergraduate medical and dental courses. This permission is valid for those who have been appeared and cleared the National Eligibility cum Entrance Test (NEET). They are permitted to take admission in any deem university under the management quota.

What did the court announce regarding admission of OCI students?

  • Such expats would be eligible to take admission in any deemed university under the management quota.
  • The Director General of Health Services (DGHS) would notify all the OCI students regarding this order of the court. He would also convey the on-going second round of the admission counseling for the MBBS and BDS courses.
  • OCI students will be entitled to take admissions in all quotas, including management, government and NRI. This is declaimed in the interim order of the Bench that comprised the Medical Council of India.
  • The quota for the OCI students would be extended to all India quota medical seats in the state-run medical colleges.
  • Under Citizenship Act, overseas citizens would have no bar in law to take admission in the deemed varsities. This act delivers them the right to take exam of all-India pre-medical test or any other test for the persuasion of career in any other field.

These interim orders have given a lease of life to the NRI students who want to catch up their career in medical field. They can apply for the OCI card in India or file a petition for the conversion of PIO card (if they have) to shape up their career in India. Once acquired this card, they would be able to grab its leverages lifelong.

New Year Gift: Date Extended for Converting PIO into OCI

New Year Gift: Date Extended for Converting PIO into OCI

The year 2016 was full of upheavals. India announced surgical attack on corruption. The sudden announcement of banning currency notes of 500 and 1000 felt no ground under the feet of every Indian. These denominations configured 86% of the liquid asset in this economy. But this declamation on 8th November, 2016 ceased its liquidity. NRIs, PIOs and OCIs are no exceptions. They too fell under this grid.

Difference between PIO & OCI:

PIO or Person of Origin is the migrants who can travel across India an uncountable number of times. It permits hassle-free work and stay in this country if the person wants to live for more than 180 days. It was first introduced on 15 years ago in 2002. But in November 2014, this service was ceased.

OCI or Overseas Citizen of India card acts as the lifetime visa. It provides more benefits than that of PIO card. This scheme was launched in August, 2005.

Now, the Ministry of External Affairs (MEA) has decided to merge PIO to OCI card. This news came into spotlight in 2014. Thence, the government has twice fixed its date of conversion. Now, it would be third time when the date of merger has been extended.    

Good News for Migrants  

Now, the first phase of this surgical attack is getting over on 30th December 2016. The limit of 50 days for currency conversion from the local financial entities is ended. After such a big jolt, the prime minster has provided a reason to smile and cheer to emigrants.

Amid prevailing grudge after demonetization, the current Prime Minister Mr. Narendra Modi is trying to win their heart on the eve of New Year. The Centre has extended the date of converting PIO card into OCI card. It’s not the first time but the third time when extension is announced.

Erstwhile, it was 31st December 2016.

New Date for Registering Conversion of PIO card  

Wondering till when is it extended? The External Affairs Minister has set 30th June 2017 as the last date for registering merging of PIO card. The competent authorities, including FRRO, Bureau of Immigration, Posts and Indian Mission, have been following this announcement.

Is there any change in conversion process?

No, the conversion process shall remain the same. The applicants can visit the official government website. Alternatively, the outsourcers like S2NRI, can do it in short interval. After deploying the outsourcer, the applicant needs to scan and dispatch his/her credentials of identity and address. The rest of the work would be of the assigned entity. Within said period, the document is delivered to the applicant.

But beware of the fraudulent. Defaulters can use the needy as the source of doing fraud. So, scrutinize the authority before assigning for immigration related work.

Checklist of Documents to Get OCI Card Online

Checklist of Documents to Get OCI Card Online

Merger of PIO card to OCI

The bulletin of merging Person of Indian Origin (PIO) card in OCI card created chaos in Indian community abroad in 2014. Non-residents were stricken with fear. Actually, the then prime minister of India Narendra  Modi announced this merger. It was a shocking moment for the emigrants’ community since the PIO card was the only licence to battle the difficulties during visits to India.

It’s good news for the Indian diaspora abroad that it has got leverage of lifetime visit to the nation. Conversely, the persons of India could enjoy this leverage for just 15 years.

Checklist of the Documents required for OCI:

Emigrants trap in confusion when it comes to submission of documents. Lacking any document from the checklist of conversion is likely to rejection. Therefore, it is recommended to get well-prepped with the whole checklist in advance.

Documents required:

  • Completely filled OCI application form with its three duplicate copies
  • Citizenship certificate
  • Registration permit and its copy in case the applicant arrived to India 90 days before submitting the OCI application.
  • Parents’/ Grandparents’ passport of India (It can be current or expired.)
  • Passport and its photocopy with at least 6 months validity
  • Indian visa with 3 months validity or PIO card
  • Birth Certificate in case the applicant is applying on the basis of his/her parents or grandparents.
  • Marriage certificate
  • Land ownership records
  • 3 photographs with either grey or white background and no spectacles /caps measuring 35mmX35mm
  • Affidavit or application if the name of the applicant or its spelling has been changed.
  • Demand draft of INR 15,000 as a payment if the applicant did not get OCI card online. It can be varied. If it is merged, the fee would be nil or nominal against the postal service. The demand draft should be made in favour of account officer (Secretariat) Ministry of Home Affairs (MHA), New Delhi.

Are you confused over what would be the documents of parents and grandparents? Let’s have a roundup of these valid proofs:

  • Proof of being Indian citizen at the time its constitution was declared. It can be their birth certificate, school certificate or land ownership records.
  • Proof of their belongings to this country on 15th August, 1947
  • Proof of their citizenship on 26th January 1950. It can be the domicile certificate issued by the competent authority or their passport.

What if the applicant fails to prove his citizenship?

At such critical time, the applicant must obtain nativity certificate. It is issued by the state government. It officially declares that the authentic relation of the applicant with his/her parents and grandparents.

It can be any Baptism certificate issued by the church and attested by the Collector/ District Magistrate.

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