Whether OCI Holders Can Be Exempted From FEMA Norms
The Supreme Court on Tuesday sought the Centre’s response to a petition seeking exemption for resident Overseas Citizens of India (“OCI”) who are permanently domiciled in India (“Resident OCI”) from the purview of the Foreign Exchange (Acquisition and Transfer of Immovable Property in India) Regulations, 2018 (“FEMA Regulations”).
Unfair to subject OCI card holders to FEMA regulations
An OCI is a person residing outside India, who is registered as an OCI cardholder under the Citizenship Act, of 1955. The exemprtion has been sought under Regulation 2(d) of the FEMA Regulations, whereunder the FEMA Regulations have been made applicable to Resident OCI. The petition has been filed by the Association of Resident Overseas Citizens of India and Families and one Dr. Narayan Hulse, contending that it was unfair to subject Resident OCI to the FEMA Regulations since the Resident OCI have been residing in India for a long time and have been paying taxes on their global incomes in India. This affects the financial and educational opportunities available to Resident OCI in India.
Ask of resident OCIs fair and reasonable say legal experts
Is bringing OCIs under the purview of the Foreign Exchange Management Act, of 1999 even when they are residents in India and seeking them to pay tax on their global income in India, arbitrary and violative of the right to equality?
speaking with BW Legal World on the issue Siddharth Mody, Senior Partner, Desai & Diwanji says Currently, the FEMA Regulations make no distinction between non-resident Indians (“NRI”) and Resident OCI. It may not be accurate to consider NRI and Resident OCI to be at par when it comes to the FEMA Regulations, since the latter is permanently domiciled in India and are regularized taxpayers of the country. Therefore, we believe the ask of the Resident OCI is fair and reasonable and this will provide big relief to OCI and will help in structuring deals if relief is granted.
Atul Pandey, Partner, Khaitan & Co reminds us of an earlier case on similar lines and says,
This follows the judgement of the Supreme Court in Anushka Rengunthwar & Ors. Vs Union of India wherein the Supreme Court had upheld the rights of an OCI by holding that a notification that an OCI could not complete for seats reserved for Indian citizens in medical courses here would not have retrospective effect and OCI cardholders would be entitled to the rights and privileges which had been conferred on them prior to the notification.
Echoing a similar view, the Supreme Court on Tuesday also said that a bench, consisting of Justice AS Bopanna, has already decided on the issue of whether OCI holders and Non-Resident Indians can be treated at par with each other.
