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Dual Citizenship Rules for NRIs in India: Understanding the Current Landscape and Future Possibilities

Unveil the intricacies of dual citizenship rules for NRIs in India, exploring current regulations and potential changes. Dive into a detailed guide on NRI dual citizenship possibilities.
10
min read
February 3, 2024
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Non-resident Indians (NRIs) often grapple with the complexities of citizenship and legal status. India's stance on dual citizenship has been a topic of much debate and discussion, especially among the vast Indian diaspora. This blog delves into the current rules, legislative changes, and the broader implications for NRIs regarding dual citizenship in India.

Current Rules on Dual Citizenship for NRIs

As it stands, India does not recognize dual citizenship. Indian laws mandate that individuals cannot hold citizenship in both India and another country simultaneously. If an Indian national opts for citizenship in another nation, they are required to surrender their Indian passport and renounce their Indian citizenship​​.

Dual Citizenship Bill: A Glimpse into the Future

A bill proposed in the Indian Parliament aims to amend this situation. Introduced by Congress MP Shashi Tharoor, the bill seeks to alter Article 9 of the Indian Constitution, thereby allowing foreign nationals of Indian origin to obtain dual citizenship​​. This change, if enacted, would significantly impact the Indian diaspora globally, fostering closer ties with their country of origin.

The Role of Overseas Citizen of India (OCI) Card

In response to the diaspora's demand for dual citizenship, the Indian government introduced the Overseas Citizen of India (OCI) card in 2006. This status permits foreign nationals of Indian origin to live and work in India indefinitely, though they lack certain rights like voting or holding public office​​.

NRI and OCI: Understanding the Difference

It's crucial to distinguish between NRI and OCI statuses. An NRI is an Indian citizen residing abroad, while an OCI is a foreign national of Indian origin. NRIs are subject to restrictions, such as not living in India for more than 182 days in a financial year, whereas OCIs can reside indefinitely​​.

Legal Framework Governing NRIs

NRIs are governed by several laws, including the Income Tax Act, the Foreign Exchange Management Act (FEMA), and the Aadhar Act. These determine taxable income, legal accounts, and investments, and eligibility for Aadhar Card​​. Under FEMA, a person is considered an NRI from the day they leave India for an undetermined period​​.

Tax Implications for NRIs

The Income Tax Act stipulates that NRIs must pay tax on global income if they are no longer Indian residents. However, they can visit or rent property in India without breaching income tax laws, provided they adhere to specified protocols​​.

Investment and Banking for NRIs

NRIs can hold specific bank accounts, such as NRE, NRO, and FCNR accounts, compliant with FEMA and Income Tax laws​​. Additionally, it's illegal for NRIs to invest in certain Indian government schemes like the Public Provident Fund or Post Office Schemes​​.

Property Ownership and Restrictions

While NRIs can buy residential and commercial property in India, they are prohibited from acquiring agricultural land. Transactions for property purchases must be made in rupees from an NRO account​​.

Conclusion: The Evolving Landscape for NRIs

The status of dual citizenship for NRIs in India remains a dynamic and evolving subject. The proposed dual citizenship bill, if passed, would mark a significant shift in India's citizenship policy, potentially benefiting millions of Indians living abroad. For now, NRIs must navigate the existing legal framework, keeping abreast of any changes that might affect their status and rights in India.

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Tejas is an accomplished Chartered Accountant with a passion for finance. With a decade's worth of extensive experience in the banking and credit domain, he has a deep understanding of the financial landscape across consulting and start-ups. In his time away from work, Tejas enjoys sharing his knowledge and helping others understand the intricacies of this complex domain.

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