The Supreme Court has directed the Centre and Reserve Bank of India (RBI) to respond to whether Overseas Citizens of India (OCI) can be exempted from the Foreign Exchange Management Act’s (FEMA) norms.
For resident OCIs, who have a permanent address in India, an exemption was sought from Regulation 2(d) of the 2018 Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations.
A bench of Justice KM Joseph and Justice BV Nagarathana on Monday issued notice on a plea, which has been filed at behest of Association of Resident Overseas Citizens of India and Families, averring that OCIs should not be subjected to FEMA norms as they pay tax on their income generated abroad in India.
According to the petitioners, this is arbitrary and in violation of their right to equality.
The court, however, noted that a Supreme Court 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.
The plea has stated that the clause, which applies FEMA to resident OCIs, deprives them of the protections for which they established their residence in India.
While urging the court to take note of the “arbitrary” notification, which has “the unavoidable consequence of depriving Resident OCIs of their means of subsistence, their legal means of livelihood, and their legitimate business and occupation”, the petitioners sought for it to be set aside.
The object and effect of the notification is to prevent resident OCIs from enjoying those guarantees on the basis of which such resident OCIs had adopted permanent domicile of India, according to the plea.
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