Swati & Shekhar Rao (names changed on request) are in New Jersey in the US and expecting their first child – while Shekhar, an IT programmer, is on a H1B work visa, Swati is on a dependent H4. The big question on both their minds is whether their child, who is expected early next year, should have Indian or US citizenship.

The child born in the US will be issued a birth certificate in America and would almost automatically become a US citizen without much paperwork.

However, for the Raos, who are likely to return to India after about a year, when Shekhar’s assignment gets over, this could pose problems. If they initiate the process for getting a US passport for their baby, s/he would not be an Indian citizen and would require a visa or PIO/OCI card to enter India and not enjoy all rights that Indian citizens enjoy. And, in that case, the child would have to decide on turning 18 whether to opt for Indian citizenship or continue as an American citizen.

This could lead to complications in future, an example being Mumbai immigration lawyer Poorvi Chothani’s client, a high net worth businessman, who is being sued by his son because the father had got US citizenship by birth for him.

The Rao couple is now faced with many questions – would it have been better for them to have had their child in India? Would they end up paying huge school and college fees for their child, an American citizen, after they return to India? Was there any way in which they could opt for Indian citizenship for the child born in the US?

Ranjit Malhotra, an advocate specialising in comparative immigration and nationality laws, is of the opinion that it is important for Indian parents who are overseas when their children are born to find out in advance what the citizenship laws of that foreign jurisdiction are and what the implications would be for the family.

“For many foreign jurisdictions, a child born to Indian parents on a work visa in a foreign country will not automatically be guaranteed citizenship or nationality of that particular host country. For instance, for a child to acquire British nationality, either of the parents should be a British citizen whilst the birth of the child took place in the UK or alternatively, either of the parents should be settled in the UK,” Mr Malhotra said.

But while pointing out that children of Indian parents born overseas may not automatically acquire the nationality of their host countries, in cases when they do acquire citizenship rights when parents are working overseas, the downside is that parents will have to apply for a visa for the minor child when they come to India, Mr Malhotra said. “If the child is an overseas citizen, then there are issues regarding mandatory registration with the foreigner registration authorities after the stay extends beyond a period of 180 days. Sometimes, this can be very complicated and cumbersome in terms of extensions on account of bureaucratic delays,” he added.

Often parents, who are in the US on work permits, would like to opt for US citizenship for their children because of the advantages that American passport holders enjoy. “US passports allow access to the American economic and other opportunities. It also allows visa-free travel to more than 160 countries. So Indians in the US on work permits often eagerly obtain US citizenship and passports for their children who are born in the US.

Most of them do not even examine the long-term implications of this,” says Chothani.

“This is because once you are a US citizen you have to pay income tax to the US on your global income no matter where you live. Further, if this individual were to give up American citizenship s/he may be subject to an expatriation tax on worldwide assets levied on wealth valued at a mark-to-market value at the time of expatriation. For instance, a person living in a multi-million dollar house, with no intention of wanting to sell it, might end up paying a tax on this property at the time of expatriation,” she adds.