NRI Investment in NPS: Eligibility, Documents, Process, Tax benefits

This IPO News guide/article covers “NRI Investment in NPS: Eligibility, Documents, Process, Tax benefits”. The page is organized around national pension scheme, types of nps, 1. tier i nps, 2. tier ii nps, are nris allowed to invest in nps?. IPO News presents the structured facts and tables in its own layout and wording.

Topics Covered

• National Pension Scheme
• Types of NPS
• 1. Tier I NPS
• 2. Tier II NPS
• Are NRIs allowed to invest in NPS?
• Who is Eligible NRI to invest in NPS
• Where does NPS money invested?
• NPS Pension Fund Managers
• How to open NRI NPS account in India?
• Open NRI NPS account Online with Banks
• NPS Account Opening Documents Required for NRI
• NRI Contribution to NPS Scheme
• NRI NPS Investment Withdrawal Rules
• On Retirement or Superannuation (after completing 60 years)
• Pre-mature Exit (withdrawal before 60 years)
• NPS rules for Partial withdrawal
• Tax-benefits on NPS investment for NRIs
• Zerodha Trade@20
• Frequently Asked Questions
• 1. Can OCI invest in NPS?−
• 2. Can an NRI open Tier II NPS account?+
• 3. Is there any minimum contribution in NPS schemes?+
• 4. What is the maximum amount an NRI can invest in NPS?+
• 5. What is the lock-in period on NPS?+
• 6. What is the maturity period of NPS?+
• 7. Is NPS tax-free for NRI?+
• 8. Can an NRI withdraw 100% NPS corpus lump sum?+
• 9. Can I open multiple NPS accounts?+
• 10. Can an NRI join NPS?+
• 11. What is PRAN in NPS?+

Key Facts

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• NRI must be aged between18 to 70. Earlier, the age limit to open NPS account was 18 to 60 years.
• Pay the minimum NPS subscription amount of Rs 500 through the linked NRE or NRO account.
• E-sign the NPS form using Aadhar OTP or download and print out the NPS form and then sign and courier it to the CRA within 90 days.
• Make an initial contribution of at least Rs 500 to your NPS account through net banking or payment gateway.
• After successful payment, you will receive a 12-digit PRAN number. A welcome kit also will be sent to your registered email address with a PRAN number and password.
• The minimum contribution to the NPS account is Rs 500 per month.
• In a single transaction, at least Rs 500 must be deposited into the NPS account for NRI.
• Minimum yearly contribution to NRI Tier I NPS account is Rs 1000.
• NPS account holders cannot redeem money from their NPS account before attaining the age of 60 years. Thus, withdrawal is only permitted after retirement. Here are the rules on how to withdraw NPS deposits:
• One can withdraw accumulated retirement corpus from the NPS scheme after turning 60 years.
• NRI NPS subscribers after reaching 60 years can withdraw 60% as lumpsum while for the remaining 40%, an annuity plan is to be purchased to get a fixed regular income every month.
• If the total accumulated retirement corpus is upto Rs 5 lakh, an NRI can withdraw 100% amount as lump sum without purchasing an annuity plan. All these payment is also tax-free.
• If the accumulated amount in an NPS account is less than INR 2 lakhs at the time of retirement, one can redeem the entire amount.
• If you have been an NPS subscriber for at least 5 years or above, you can exit from NPS scheme before retirement.
• You can withdraw 20% of NPS corpus as lumpsum money, and can buy an annuity plan for rest 80% of the corpus amount to receive monthly income.
• If the total corpus built in your NPS account is upto Rs 2.5 lakh, NRI subscribers can opt for full 100% lumpsum withdrawal.
• Note: In the event of death, the legal nominee or heir of a private sector employee as an NPS account holder is authorized to withdraw 100% accumulated NPS corpus.
• NRI must be an NPS subscriber for at least 3 years.
• Maximum 25% of the NPS contribution in Tier I account is available for partial withdrawal.
• A maximum of 3 partial withdrawals within a gap of 5 years are allowed during the NPS tenure.
• For example, if a NRI has invested Rs 2,00,000 in his NPS account in the last 4 years. Since the holder has completed 3 years, NRI is eligible for partial withdrawal of 25% of the corpus money.
• An additional exclusive tax incentive of upto Rs 50,000 u/s 80CCD (1B) over the above limit of Rs 1.5 lakh is offered.
• Upon superannuation or maturity after 60 years, 60% lumpsum payment is also tax-free.
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• Yes, a minimum contribution needed in NPS account is Rs 500, if you choose to contribute every month. However, you can also choose to contribute on yearly basis with minimum investment required is Rs 1000.
• There is no upper cap or maximum ceiling on investment in NPS. However, you will get a maximum tax deduction of Rs 1.5 lakh only from your taxable income.
• The maturity period of NPS is 60 years of the subscriber’s age. Thereafter, you can withdraw your investment in NPS subject to certain conditions regarding lumpsum and monthly annuity payment.
• Although NPS matures after 60 years, one can choose to defer withdrawal and stay invested in NPS for upto 75 years. To do so, NPS account holder has to initiate deferement request online on CRA system.
• The age limit to invest in NPS is 18 to 70 years which was earlier 60 years.

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