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In everyday conversations, many tend to use the terms NRI and PIO interchangeably. Yet, by diving deeper into the subject, it becomes evident that there's a significant difference between NRI and PIO.
The nuances distinguishing NRI vs PIO might seem trivial, but these distinctions have profound implications, especially when considering their rights, available investment options in India, and the types of bank accounts they can open.
To help you navigate this difference, this article will shed light on these distinctions and guide you in understanding the various banking avenues available to each category.
The term ‘NRI’ stands for Non-Resident Indians and refers to individuals of Indian origin residing outside of India.
Interestingly, despite the term suggesting otherwise, an NRI remains an Indian citizen and possesses an Indian passport even though they predominantly live outside of India.
Determining an individual's residential status becomes crucial, especially when it comes to taxation under the Income Tax Act. While Section 6 of this act doesn't offer a direct definition of an NRI, it delineates the criteria to be deemed a resident of India.
The criteria specify that one is considered a resident of India if they have either:
Consider the financial year 2023-24. If we look back at the previous financial year, i.e. 2022-23, a person would qualify as a resident if they stayed in India for at least 182 days during 2022-22. Alternatively, if they were in India for 60 days or more in 2022-23 and had also been in India for a combined 365 days during the four years from 2018 to 2021, they would also be classified as a resident.
Anyone not meeting these stipulations is labelled an NRI. It's worth noting that NRIs have the privilege of opening specific bank accounts in India, allowing them to invest, transfer funds to relatives in India, or securely manage their Indian incomes such as pensions or rental earnings.
A Person of Indian Origin (PIO) is an individual who either has Indian roots by birth or descends from a family originating from India. Essentially, if you live abroad but hold Indian citizenship or have either an Indian parent or grandparents, you're recognised as a PIO.
For those fitting these criteria, the government issues PIO cards. Holders of these cards enjoy certain privileges in India. With a PIO card, one can work, study, or simply visit India, and this is valid for up to 15 years from the date of issuance.
With that said, it's worth remembering that there are specific areas within India that PIO cardholders cannot access without obtaining permission from the Foreign Regional Registration Office.
But there are exceptions. Citizens from Bangladesh and Pakistan, for instance, aren't eligible for the PIO status. Outside of this exclusion, to qualify as a PIO, an individual should meet at least one of these conditions:
In India, the concept of dual citizenship isn't recognised as per the Constitution. However, considering the aspirations of the Indian diaspora, the government introduced the Overseas Citizen of India (OCI) card.
It's crucial to understand that the OCI status isn't the same as 'dual citizenship.' While it offers several privileges, it doesn't grant political rights
The eligibility revolves around historical and ancestral connections to India. If a foreign national:
Minor children of individuals fitting the above criteria can also apply for an OCI card. However, those who were once citizens of Bangladesh or Pakistan are not eligible.
The table below highlights the difference between NRI and PIO based on various aspects –
|Aspect||NRI (Non-Resident Indian)||PIO (Person of Indian Origin)|
|Definition||An Indian citizen who resides outside India for a certain period||
|Citizenship||Still holds Indian citizenship||May or may not hold Indian citizenship — could be a citizen of another country|
|Eligibility Based on Residency||Determined by the number of days spent outside India (generally based on taxation laws)||Defined by ancestral roots rather than the number of days spent in or out of India|
|Passport||Holds an Indian passport||Might have a passport from another country but can also have an Indian one if they are a citizen|
|Duration of Stay in India||Limited by taxation rules — typically 182 days or fewer in a financial year — to maintain NRI status||PIO cardholders can stay up to 15 years from the date of the card's issuance|
|Access to Restricted Areas||May require permission for certain restricted areas in India||Need permission from the Foreign Regional Registration Office for certain restricted places|
|Bank Accounts in India||Can open NRE and NRO accounts||Can open NRO accounts, but not NRE accounts|
|Exclusions based on Nationality||None. All Indian citizens can be NRIs based on their residency.||Citizens of Bangladesh and Pakistan cannot be recognised as PIOs|
Investment avenues in India are wide-ranging and cater to both NRIs and PIO cardholders. Whether you're seeking to grow your funds or simply secure them, India offers various options tailored for its global community.
Here's a simplified guide on the investment opportunities available to NRIs and PIOs –
For NRIs and PIOs, India offers specialised bank accounts such as the NRE (Non-Resident External), FCNR (Foreign Currency Non-Resident), and NRO (Non-Resident Ordinary) accounts.
Repatriation refers to the transfer of funds from an NRO account to a foreign account. While this was limited in the past, current rules permit the transfer of up to USD 1 million annually, after income tax deductions.
These are investments from which returns can be transferred back to the investor's foreign account.
These investments primarily keep the returns within India.
NRIs and PIOs can buy residential or commercial properties in India. However, they're restricted from investing in agricultural land, plantation property, or farmhouses, unless inherited or gifted to them.
If an NRI or PIO inherits property or other assets in India, the process to transfer this inheritance to their legal heirs — either in India or abroad — is straightforward or doesn't require special permissions.
Indian banks and financial institutions provide housing loans to NRIs and PIOs, making it easier for them to own property. These loans are similar to those offered to Indian residents but may have specific documentation requirements.
Ans: An NRI (Non-Resident Indian) is an Indian citizen who resides outside India but holds an Indian passport. On the other hand, a PIO (Person of Indian Origin) might not be an Indian citizen but has Indian ancestry or birth, indicating a past familial connection to the country.
Ans: While both NRIs and PIOs have several rights in India, NRIs, being Indian citizens, have more comprehensive rights. For instance, NRIs can vote in Indian elections, whereas PIOs cannot.
Ans: An NRI is an Indian citizen living abroad while a PIO is someone with Indian ancestry but might not be an Indian citizen. An OCI (Overseas Citizen of India), on the other hand, is not a full Indian citizen but has a lifelong visa to India and enjoys several rights similar to NRIs except political rights.
Ans: Yes, there are differences. While both PIO and OCI cardholders have multiple rights in India, OCIs have a more extended range of benefits. They are entitled to a lifelong multi-entry visa to India, whereas PIO cardholders have certain restrictions.
However, it's important to note that the PIO card has been merged with the OCI card, making the distinction less relevant in current times.
Ans: No, India does not offer dual citizenship. While the OCI status provides many privileges resembling citizenship, it does not grant political rights or full citizenship. An NRI holding an OCI is not considered a dual citizen.