FEMA Exemption For OCIs: SC Seeks Response From Central Govt and RBI

The Supreme Court on Monday sought the Central Government’s and the Reserve Bank of India’s (RBI) response on a petition to exempt resident Overseas Citizens of India (OCIs) from the Foreign Exchange Management Act (FEMA).

A bench of Justice KM Joseph and Justice BV Nagarathna made the remarked while hearing a petition filed by Association of Resident Overseas Citizens of India (AROCI).

The bench issued the notice to the Centre and the RBI after noting that the other petitions relating to OCI parity with Indian citizens and Non-Resident Indians (NRIs) had already been decided in a recent judgement authored by Justice AS Bopanna.

Appearing for the petitioners, advocate Anindita Mitra stated that subjecting OCIs to FEMA norms when they have resided in the country for long and pay tax on their global income in India, is arbitrary and violative of right to equality.

As a result, an exemption from Regulation 2(d) of the 2018 Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations was requested for resident OCIs who are permanently domiciled in India.

The aforementioned provision requires that the Regulations would be applicable to OCIs.

The Regulations define an OCI as a person residing outside India who is registered as such under Section 7(A) of the Citizenship Act of 1955.

The petitioners contended that by making FEMA applicable to resident OCIs, the provision deprives them of the guarantees on which they took up residence in India.

“The object and effect of the impugned notification is to deprive Resident OCIs from enjoying those guarantees on the basis of which such Resident OCIs had adopted permanent domicile of India, thereby directly and substantially affecting the Resident OCIs’ financial and educational opportunities in this country … has the inevitable effect of depriving the Resident OCIs of their livelihood, their legitimate business and occupation,” the petition stated.