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Understanding a Non-Resident Indian (NRI)

Individuals might have to reside in other countries across the globe. It may be for their professional and personal requirements. Similarly, nationals from other countries may wish to reside in India. In both cases, the individuals are subject to different tax and financial regulations compared to residents of India. Therefore, it could be confusing to comprehend NRI vs OCI and which status is applicable to an individual. Therefore, a comparison of NRI Vs OCI will help you understand the differences between the two of them. In this article, you will also come to know about the eligibility, documentation, and benefits of each category.

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Who is a Non-Resident Indian NRI?

An NRI is a person who has Indian citizenship but resides outside the country. The definition of an NRI is someone who has been out of India for more than a specific period. Such individuals can be settled abroad for employment, business purposes. They may also be pursuing any other activities. Additionally, they could even stay outside the country indefinitely if they want to.

A Non-Resident Indian (NRI) refers to an Indian person residing outside India. Additionally, such an individual may be a citizen of India or a person of Indian origin. The Foreign Exchange Management Act, 1999 (FEMA) and the Income Tax Act, 1961 also specify the NRI definition clearly. 

NRI Definition as per Income Tax Act in India

Non-resident Indian or NRI is not a resident of the country. But the individual is a citizen of India or a person of Indian origin. The residential status of an individual is determined under Section 6 of the Income Tax Act. Subsequently, based on fulfilling the conditions an individual is considered a non-resident Indian or not. According to the Section 6 of the Income-tax Act, an individual living in India is a resident. The decision is taken upon satisfying the following conditions:

 1.  If he/she was in India for a period of 182 days or more during the previous year; or

 2.  If he/she was in India for a period of 60 days or more during the previous year. Additionally, the individual must have been living in India for 365 days or more during the last 4 years. However, these 4 years must be ones immediately preceding the previous year.

Therefore, individuals not fulfilling the above criteria are considered NRI as per the Indian Income Tax Act.  Although there might be few exceptions to it as well.

NRI Definition as per FEMA Act in India

According to RBI circular No.8/2013-14 NRI under FEMA, 1999, is a person residing outside India. However, such a person must be a citizen of India or of Indian origin. Also, the stay of an NRI outside India can be for an uncertain period. It includes various reasons such as employment, business, vocation, and others.

What is The Importance of NRI Status?

The NRI status is very important for Indian residents working in any other country across the globe. It also helps them avail of tax benefits on their NRE savings account and NRE Fixed Deposits. Additionally, NRI status allows individuals to repatriate funds from their NRE and NRO accounts. The minimum balance amount in NRE and NRO accounts is quite low compared to regular accounts. Investments in all Indian financial instruments are allowed and additionally, they can invest in FCNR Deposits as well. Their interest from FCNR (Foreign Currency Non-Resident Account) deposits is tax-free.

Advantages and Limitations of Being an NRI

Income earned outside of India is not taxable unless the payment is received within IndiaNRIs are not eligible for purchasing agricultural land within the Indian territory
NRI is eligible for being a voter in Indian electionsIncome NRIs earn within India is taxable
The exceptional overseas account is available
Indian education system allows special reservations for NRIs and their offsprings

Understanding an Overseas Citizen of India – OCI

India is one of the few countries in which you can obtain an OCI (Overseas Citizen of India) card. Therefore, it is important to understand OCI for the NRI vs OCI comparison. Simply it means stamping your immigration status with permission to stay indefinitely and work legally within India. The approval however involves some limitations, only citizens from certain nations get this privilege. Your home country must also agree to the issue of OCI status.

Who is an Overseas Citizen of India – OCI?

An OCI is a person of Indian origin who is a foreign national. Under Section 7A of the Citizenship Act, 1955 an individual can register as an Overseas Citizen of India Cardholder.

In 2005, the Government of India (GOI) introduced a scheme to issue OCI cards. Under this scheme, GOI offers an option to foreign nationals to live in India for longer periods. It ensures individuals can reside in India without any hassle or delay due to their status. However, you must comply with all regulations set by the government plus they have dual citizenship through birthright if applicable. 

In other words, a citizen of another country can be granted several rights and freedom as enjoyed by Indians. Additionally, an OCI card can be used as a long-term visa available to such citizens with familial links in India. Subsequently, it grants them lots of benefits similar to those associated with NRIs or Indian citizenship.

Eligibility for an OCI Card

A foreign national is eligible for an OCI Card if he/she satisfies any of the following conditions- 

1. The individual is a citizen of India on or at any time after 26th January 1950. 

2. He/ she is eligible to become a citizen of India on 26th January 1950. 

3. The applicant belongs to a territory that became part of India after 15th August 1947. 

4. At least grandparents or parents of the applicant were citizens of India according to any of the above conditions. 

5. A minor child whose parents already possess above eligibility is the applicant. 

6. A minor child whose both parents or at least one of the parents is a citizen of India. 

7. Spouse of foreign origin of a citizen of India or an OCI Cardholder is the applicant. However, their eligibility is subject to the marriage being registered. Their marriage must have also subsisted for a continuous period of at least two years. Also, the period taken into account is the one immediately preceding the presentation of the application.

The eligibility criteria exclude people originating from specific countries. It refers to individuals who or either of whose parents are or have earlier been citizens of these countries. The Central Government may specifically mention these countries by notification in the Official Gazette.

Also, foreign nationals cannot apply for OCI in India while on Missionary Visa, Tourist Visa, and Mountaineering Visa. Moreover, the foreigner has to be ordinarily resident of India i.e. living in India continuously for 6 months. However, only upon meeting the required criteria, the foreigner is eligible for an OCI card.

Advantages and Limitations of Being an OCI

Lifelong multiple entries for visiting IndiaOCIs cannot purchase agricultural land in India
Registering with local police authorities after 180 days is not requiredThey are not eligible for government jobs
No requirement of special approval or permission to work and studyNot allowed to vote or participate in Indian elections
Financial and educational benefits as applicable to NRIs are allowed

Difference Between an NRI and OCI

With so many rules and regulations to maintain, understanding the immigration status becomes complicated. 

Let us look at the difference between NRI vs OCI cardholders in more detail. 

ParticularsNon-Resident IndianOverseas Citizen of India Card Holder
EligibilityAn individual automatically acquires NRI status upon residing in India for less than 182 days.Citizen from a foreign country who is eligible to become an Indian Citizen on or at any given time post-1950. Also, individuals belonging to a territory that has become a part of India after 1947.
ApplicabilityThere is no application or formal procedure to classify as an NRI. The NRI status is inevitable once the stipulated requirements are met.Application for OCI card can be submitted to the Government of India through the online portal. The time frame for processing post-application acknowledgment is 30 days.
Investment OptionsAn NRI can invest in various financial instruments available in India. But they must adhere to FEMA regulations. An NRI can also invest in residential/ commercial properties. However, investment in agricultural or plantation property or a farmhouse is not allowed.
An OCI cardholder can invest in various financial opportunities available in India. OCI holders can also invest in residential/ commercial properties but not in agricultural, plantation property, or a farmhouse.
TaxationIncome earned within India through investments and receipts is liable to taxes in India.Global income earned is subject to taxation based on the conditions of DTAA (Double Tax Avoidance Agreement).
AdmissibilityFor 182 days or lessFor an indefinite period
DocumentationOverseas residential proofTo apply for an OCI Card, the holder needs to provide the following documents:
– Proof of current Citizenship.
– Evidence and documents to prove self, parents, grandparents or great grandparents being citizens of India.
– Relationship evidence with a parent, grandparent, or great-grandparent, to prove their Indian origin.
– Evidence of spouse as a citizen of India or an OCI cardholder.
– Current passport size photograph of the applicant.
Thumb impression and signature of the applicant.


The Indian government has introduced all measures to make things easy for non-residents of the country. Therefore, every individual planning on migrating must know about their standards and features. It helps you not to lose your roots in both countries as a result of migration. Thus, you can enjoy a worthy connection between where you live now and the place where your ancestors come from. You must understand the difference between NRI Vs OCI clearly to disclose your status clearly next time.

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Frequently Asked Questions

What is PIO?

A Person of Indian Origin (PIO) is a foreign national who is of Indian origin e.g. previously held Indian citizenship, or was born in India, or his or her parents were Indian citizens. This is a status therefore associated with your citizenship and not residence. A PIO may be living in India or overseas.

Can a PIO with US or Canadian citizenship invest in mutual funds in India?

All PIOs/OCIs who are US and Canadian citizens can invest with Scripbox. (Irrespective of where they reside).

I am a PIO residing in India, how do I get my KYC registered and Scripbox account activated?

You can register with Scripbox with the Resident status as Resident Indian and upload the clear colour scanned copies with your e-sign on all of your KYC documents during the registration itself. 
Here are the list of documents:
Your photograph.
Your Pan Card.
Your address proof (Aadhar Card / Driving License / Passport / Voter ID Card).
KYC Authorisation Letter. (Please write on a while plan sheet of paper that “I authorise Scripbox to do my mutual fund KYC” & sign below it) 
Video Selfie: Record a video by facing the camera for 5 seconds and read the OTP