Do OCI holders need to pay tax in India?

Being a citizen of India, it is important to pay tax every year till the end of the financial year which is 31 March. Overseas Citizens of India are the people who have migrated to other countries and also hold OCI card. Overseas Citizens of India are apart from Bangladesh and Pakistan. If the OCI cardholder lives in India and works within the country, they need to pay an Income tax return.

When the person has stayed in India for more than 120 days as per new budget rule under FEMA (which was 182 days earlier) and has generated income within the Indian region on that income the tax will be paid.

When an OCI cardholder is outside Indian origin, but he is getting income in the form of rent from his tenants' property located in India. On that income, the person is required to pay Tax irrespective of his location. 

So to answer your question ‘Do OCI holders need to pay tax in India’, it depends on different situations, i.e., whether the person has stayed and earned in India for the said time period or not.

I know that citizens of India are bound to pay taxes on almost everything be it on savings, house tax, land tax, service tax or more. But I thought people who are of Indian origin but live outside India need not pay any tax but I was wrong. I wasn’t aware of OCI taxation in India previously but now I have learnt quite a number of things and I think, one must also know these things as much as they can since legal things are important to know so that you can proceed with it in future and take action if needed. Here are the most important aspects related to OCI.

Yes, the Overseas Citizens of India or OCI who are living in India for more than 182 days have to file Income Tax File return in India and pay tax accordingly. A person who earns in India is bound to pay tax to the government irrespective of his status of residence, citizenship or motive to stay here.

The income tax for OCI is based on the individual’s income and is subject to the conditions of the Double Tax Avoidance Agreement or DTAA. This is the

income tax rules for oci card holders. One might think that OCI card holders enjoy a lot of benefits but no. They can visit anytime in India but they can never buy agricultural land nor is eligible for a government job.

A person as per the provisions of section 5(1) of the Citizenship Act, 1955, a person registered as an OCI for 5 years and living in India for 1 year out of the 5 years mentioned can apply for Indian citizenship.

I hope your concept about OCI and OCI taxation in India is clear now.

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Everyone knows that each and every eligible citizen of India is required to pay taxes. Though, it is true that varying types of taxes have diverse eligibility criteria and implications. You must be wondering about OCI. I will share the tax rules of OCI income tax India below. 

OCI is an immigration status that allows a foreign citizen of Indian origin to live and work in India. The income which is accrued or received in India in any financial year by a person qualifying as a non-Resident/OCI is taxed by the Income-tax Department. 

According to the Citizenship (Amendment) Act, 2005, those who have an Overseas Citizenship of India card are eligible to pay taxes in India. Any Persons of Indian Origin (PIO), Overseas Citizens of India (OCI), or Foreign Citizens have to pay income tax and file an ITR if they have been a resident for more than eighty-two days. OCI card holders get to claim tax benefit as well. 

Indias follows a 'Residency'-based taxation system.OCI tax implications are limited to the money earned in India and not on global income. Section 5(1) (g) of the Citizenship Act, 1955, states that anyone who is registered as an OCI for 5 years and is currently residing in India for one year, is eligible to apply for Indian Citizenship. Thus,be taxed as an Indian Citizen. They will be liable to pay  Property tax, income tax, wealth tax, gift tax, capital gains tax, securities transaction tax and corporate tax while following different rules as an Indian resident. 

I hope the facts shared above on OCI income tax India are helpful to you.

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