In a case seeking to exempt resident Overseas Indian Citizens from the provisions of the Foreign Exchange Management Act, the Supreme Court recently sought the positions of the Centre and Reserve Bank of India. 

On Monday, a court hearing a petition submitted by the Association of Resident Overseas Citizens of India and Families received notice from a bench of Justices KM Joseph and BV Nagarathna.

“Your prayer is that OCI citizens domiciled in India should be given the same benefits in relation to educational institutions?”, the Bench asked, during the hearing.

“That has been dealt with in a recent judgement delivered by Justice AS Bopanna on February 3. To that extent, my relief is granted”, the counsel informed.

In that ruling, the Supreme Court had ruled that the Centre's 2021 notification, which restricted OCI category students' rights to Non-Resident Indians (NRI) category seats and removed their ability to apply for general seats, would apply prospectively to those who register as OCIs after March 4, 2021. 

The complaint claims that after the Government of India introduced the OCI Scheme, Resident OCIs who had achieved great success in their professional and personal life abroad moved back to India to serve their homeland with the purpose of establishing a permanent residence there.

The petitioner argues that although nominally having a foreign citizenship, Resident OCIs are a unique class unto themselves and have no discernible ties to any foreign country. The Resident OCIs are permanently domiciled in India and have typically lived there for more than ten years. They work, pay taxes, and receive income in Indian currency. Many of these resident OCIs have made India their permanent home even if they do not retain any accommodations there.

Permanent residents of India known as Resident OCIs are required to pay income taxes to the Indian government on both their domestic and international income. In addition to this, they pay education cess and other taxes that directly support the development of the nation. On the other hand, non-resident OCIs who live abroad do not have to pay taxes to the Indian government on their worldwide earnings. 

However, OCIs are defined as "a person residing outside of India who is registered as an Overseas Citizen of India Cardholder under Section 7A of the Citizenship Act, 1955" under Regulation 2(d) of the 2018 FEMA Regulations.

“Thereby, the Impugned Regulation clubbed the Resident OCIs and other non-resident OCIs in the same bracket, seriously jeopardizing the life and prospects of the Resident OCIs, who had been permanently domiciled in India since the introduction of the OCI Scheme”, the plea argues.

The petitioners claim that regulation 2(d) applies FEMA to resident OCIs, depriving them of the protections they relied on to establish their domicile in India.

Case Title: Association Of Resident Overseas Citizens Of India And Families And Anr Vs Union Of India And Ors