OCI and PIO cards merged by the Indian government. What does it mean for you as an expat? Are there any tax implications due to this merger?
The Narendra Modi government had promised the Indian diaspora in September 2014 that the Persons of Indian Origin (PIO) and Overseas Citizen of India (OCI) schemes would be merged. In response to implementing the promise, the government made an announcement in January 2015 unifying the two schemes. An immediate withdrawal of the PIO scheme was announced, and all existing PIO card holders granted OCI status, with lifelong multiple-entry visas and exemption from police registration procedures. This was done by amending the Indian Citizenship Act.
What Has Changed?
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Effective 9 January 2015, all existing PIO card holders are now deemed to be OCI card holders. Other rules and procedures for existing PIO card holders are yet to be finalized.
Other changes announced by the Ministry of Home Affairs are as follows:
- The foreign national children of two Indian citizens will now be eligible to apply for OCI. Previously, only children with at least one OCI parent qualified for the OCI card;
- The great-grandchildren of individuals eligible for OCI will now also be eligible to apply for OCI. Only children and grandchildren of eligible OCI-eligible foreign nationals were previously eligible;
- Foreign nationals married to OCI card holders or Indian citizens, whose marriage has been registered and has existed for two years or more, will now be eligible to apply for OCI status. Previously, those married for only one year were eligible;
- Nationals of Afghanistan, Bhutan, China, Iran, Nepal and Sri Lanka, previously ineligible for the PIO card, remain eligible for the OCI card. Nationals of Pakistan and Bangladesh remain ineligible.
Has anything changed regarding the Income Tax reporting requirements ?
The income tax requirements are governed by the Income Tax laws and the Double Tax Avoidance Agreement (DTAA) between India and US. The OCI or PIO status is not a determining factor in determining the incidence of tax and therefore the tax reporting requirements stand as they are.
