I'm building a 4-20ma Receiver and I wanted to check on the following - Do I need optical isolation for my 4-20ma Receiver if my own device is powering the loop?

If you are powering the loop then is not a strict requirement. However it depends on your application and flexibility. For example if you are making an RTU that has to be as flexible as possible, you have to consider that some devices may be powered internally. If that is your case then making an isolated input would guarantee better signal integrity. Another reason to want isolation is reliability. For example if you are making a PLC or a device in which security is a most, you don't want that an over voltage or wrong connection into your 4-20 mA receiver to damage your CPU. In this case having isolation, the over voltage may destroy your receiver but your CPU may still take some corrective measures.

If you are trying to make a low cost device that is going to be used in a specific application and you have no security requirements, you can eliminate the isolation.

Thanks Santhiraj, Inaki. I also wanted to check on how much isolation is enough. Most ICs have a rating on how much Voltage Diff they can withstand on a short term and how much vdiff they can operate/work with. The short term one is good for spikes. I'm more interested in understanding what is a typical "working isolation" required. The environment I'm in is likely to have 220V AC supplies to the sensors and my equipment. Am I just going to be dealing with a few volts mismatch or few hundreds of volts mismatch?

Yes. Definately require isolation: optical or inductive (transformer). Powered or not isolation must be there, because with long wires there can be ground potential differences.

Consider looking at IEC 61131-2. The breakdown requirements of the isolation of the signal circuit and the power distribution circuit from ground and from each other. For a device that is powered from a supply with rated voltage <= 50 V DC or rms, the equivalent test voltages at sea level are 444 V rms, 635 V DC and 635 V peak impulse test. For a device that is powered
from a supply with rated voltage between 150 and 300 V rms, the equivalent test voltages at sea level are 2260 V rms, 3175 V DC and 3175 V peak impulse test.

Thanks Jonas. I'll look up IEC 61131-2.