Taxation Rules for People with Dual Citizenship?

Living in your own country provides you with many benefits, like rights, with several duties and responsibilities that you must fulfil as a resident of a country.

There are a few countries that also allow their citizens to hold citizenship in another country, which is also called Dual citizenship. 

However, Indian does not allow any dual citizenship, but we will help you to understand through this blog how people with dual citizenship in India are taxed.

What Do You Mean by Dual Citizenship? 

In simple words, dual citizenship means being a citizen of two countries legally at the same time. 

Dual citizenship provides individual rights and benefits in both countries. For example, a person with dual citizenship can live, stay, or work in both countries in which he or she has citizenship. 

This will help the individual unlock more facilities like healthcare, education, and get more financial benefits. 

Additionally, people with dual citizenship can hold more than one passport, which allows them to travel smoothly and efficiently, while enjoying the benefits of visa-free travel to most countries. 

Is Dual Citizenship allowed in India? 

No, India does not allow dual citizenship or grant any Indian citizen to hold multiple citizenship. If any person wants to apply for citizenship in another country, then they need to surrender their Indian citizenship first, and then they can proceed with their citizenship. 

To get a citizenship of another country, every Indian resident needs to surrender their Indian passport and submit it at the nearest Indian embassy under the Passport Act of 1967. 

Once they surrender their Indian passport, they can get a foreign citizenship and apply for the Overseas Citizens of India (OCI) card. 

Here are some of the eligibility criteria that you need to meet before getting a dual citizenship. 

• Any Indian citizen who applies for foreign citizenship needs to surrender their Indian citizenship under articles 5,6,8. 
• The nationality of the foreign state will be assumed by the individual for whom they have applied for citizenship. 
• Every Indian resident who has applied for citizenship in a foreign country needs to submit their Indian passport, along with all the other essential documents, to the nearest Indian embassy. 

India does not provide any dual citizenship, but you can get an OCI card, which provides you with many benefits. 

Taxation Rules for OCI Cardholders

Here are some of the taxation rules for the OCI cardholders given below:

• An OCI is exempt from the taxation on the foreign income and interest from a non-resident savings bank account, and an Indian Income source is subject to the taxation. 
• The taxability of an OCI cardholder is determined by the number of stays in India, which also helps to determine their residency status in India. 
• If a person lives or stays in India for more than 182 days in a financial year, then they will have to pay the dual citizen tax in India.

Tax exemption for the OCI cardholders from Income tax:

• An OCI cardholder can get tax exemption from investment taxation on deposits in Non-resident External Rupee account (NRE), and Foreign Currency Non-Resident Accounts (FCNR), according to the income tax rules for the OCIs and NRIs. 

Tax Exemptions for the OCI cardholders from Wealth Tax: 

• There are no taxes imposed on the assets brought from foreign countries for a period of 7 years when an OCI cardholder returns to India for permanent residence. 
• The wealth tax rate is considered as 1% and will be leviable on the amount that is more than INR 30 lakhs of the net wealth as of March 31 every year.

Also Want to Know About NRI Income Tax: Rates, Slabs, and New Rules Check Now!

Points to be Remembered by the OCI

Here are some of the important points that an OCI cardholder needs to remember. 

1. Interested individuals can apply for the OCI application through the official website www.mha.nic.in.

2. For the person who is filing the OCI application in India, they need to pay the required fees for the OCI application via a demand draft. 

• For the general category, you need to pay the fees for the OIC application of INR 15,000. 
• For the PIO cardholder: you need to pay the OCI card application fees of INR 1,400. 
• For the Minor PIO card applicants: You need to pay the required fees of INR 8,000 for the minor PIO cardholders.

3. OCI processing time takes place around 30 days from the application submission date, and it can also go up to 120 days also which depends on the situation. If there is are high number of applications, then your application will be processed and delayed. 

4. Applicants who are registered under the OCI card scheme, thery will get an OCI registration certificate, and with it they also get a life-long visa sticker on their foreign passport, which grants them a free entry to India for life. 

Benefits of the OCI Registration in India

Here are some of the OCI registration benefits given below: 

1. The OCI cardholders can visit India any time for a long time without reporting their stay in India to any local police or higher authority. 
2. They can enter India any time for work, study, or any purpose without getting or applying for a separate work visa, and they can also do it with their U visa. 
3. They get the same and equal treatment as an NRI in the economic, educational, and financial sectors in India and also get the opportunity to invest in commercial and residential property in India. 
4. As an OCI cardholder, you need to pay the same rate as an Indian national for getting entry at the national museum, monuments, national wildlife sanctuaries, and parks. 
5. The OCI cardholders are charged the same as the Indian citizens on domestic flights. 
6. As an OCI cardholder, you can practice as a lawyer, doctor, CA or be an architect in India, because you will get the same opportunity as Indian citizens. 

Eligibility Criteria to Apply for the OCI Scheme

Given below are the eligibility criteria to apply for the OCI card scheme. 

1. Any individual who is eligible to become an Indian citizen on and after 26 January 1950, including foreign citizens. 
2. Any person who belonged to a part of Indian territory after August 15, 1947. 
3. Individuals who became Indian citizens after January 26, 1950, but are foreign citizens. 
4. Children, grandchildren, or great-grandchildren of any of the above citizens. 
5. Minors are also eligible to apply for an OCI card. 

Restrictions for the OCI cardholders

Here are some of the restrictions for the OCI cardholders given below: 

• OCI cardholders cannot get an Indian passport. 
• They are not allowed to cast a vote in the democratic election in the country. 
• They are not allowed to hold any government or constitutional positions in India. 
• There are no candidates for the Lok Sabha and Rajya Sabha. 

An OCI cardholder can be granted Indian citizenship if they are registered as an OCI cardholder for 5 years and have stayed in India for a minimum of 1 year under the Citizenship Act of 1955. 

Final Words 

The dual nationality in Indian has many benefits, with all these benefits needing to be managed with proper tax implications, while considering dual citizenship as an OCI cardholder. 

Planning all the taxation and managing foreign assets alone is a little bit tough. So here is the website, which provides you with a detailed, systematic process to help you with all your queries and doubts related to Dual citizenship taxation for the OCI cardholders.

For more information, you can contact the Visament team, who is active 24/7 to help you clear all your doubts and issues.