How Can NRI Invest in NPS ?

How Can NRI Invest in NPS ? –  Recently RBI opens gate of National Pension System (NPS) for NRI’s. NPS is the now an investment option for non-resident Indians as well.

As per the Pension Fund Regulatory and Development Authority (PFRDA) guidelines NPS is a contributing pension plan up to age of 60 years with minimum contribution of Rs.6,000 in Tier I account where as there is no maximum limit.

There are various POP who will invest the amount on your behalf to various market-linked funds currently on offer—government securities fund, fixed-income instruments other than government securities fund and equity fund. It is also made mandatory that the maximum equity exposure should be  50% and only through the index funds.

After attaining age of 60 years you would be having option to redeemed the 60% of this money and buy an annuity product, it offers pension, with the rest.

In case of NPS withdrawal before the age of  60 years , you will have to use 80% of the accumulated corpus to buy an annuity. You may also be given choice for partial withdrawal up to 25% of the contributions after 10 years of being in the scheme for specific purposes.

While the Tier I account is basic, the Tier-II account works like a savings account to offer liquidity.

How to invest in NPS ?

  1. An NRI can invest in NPS through a rupee denominated non-resident (external) rupee (NRE) account or non-resident ordinary rupee (NRO) account or local sources.
  2. Money can be transfer through any bank in India as almost all banks in India work as distributors (called “points of presence” or PoP) for NPS,
  3. NRI may approach any of the bank to open an NPS account.
  4. NRI needs to fill the registration form and submit a copy of  passport and proof of address in India in case the local address is different from the address in passport.
  5. After verification NPS account will be opened.

After opening of account PFRDA card or PRAN card , permanent retirement account number will be handed over to you.

Charges :

NPS investment charges are 0.01% currently.

Read Also : How To Make Online Money Transfer To NPS Account ?

Tax Benefit 

  1. Investment in NPS account provide tax benefit as per various section of Income Tax. Contributions to NPS qualify for a tax deduction under Section 80CCD of the Income-tax Act, 1961; 10% of the salary (or total income) contributed to NPS is eligible for a tax deduction up to Rs.1.5 lakh.
  2. Additional deduction of Rs.50,000, in tier II account is also exempted. Annuities and 60% that you can keep on maturity is taxable.
  3. NPS is useful for such NRI who are intended to return India after the retirement.


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