NATIONAL PENSION SCHEME FOR NRI
Introduction National Pension System is a retirement system introduced by the government of India. However, given the growing NRI population across the world, the PFRDA has opened NPS for NRI investors as well. This is great news for NRIs with income sources from India, since they can now use the National Pension scheme for NRI to save on taxes they would need to pay on the income earned in India.
Here are 5 reasons why NRIs should open a NPS account • 1) Tax savings • Those NRIs who have income sources from India such as salary and property income can invest in NPS to benefit from tax savings under section 80CCD (1), 80CCD (1B), and 80CCD (2).
2) Choice of investment • Generally, there are restrictions for stock market investments in India for NRIs. However, NPS provides NRIs with diversified investment options in asset classes such as equity, corporate bonds, and government securities. Thus, NRI investors, based on their risk appetite, can choose the mix of debt and equity asset classes, to achieve their investment objective. The thing to note here is that in case a NRI investor wants to invest in the equity markets of India, NPS can be a good route.
3) Choice of funds • The PFRDA provides individual subscribers with two choices of funds — active choice and auto choice. If the NRI investor opts for active choice, he/she can choose the three asset classes in the proportion in which he/she wants the contributions to be divided among these asset classes based on the investor’s risk profile. Auto choice is a default option where the based on the NRI investor’s age, the NPS automatically allocates the funds proportionately in different asset classes.
4) Leading your retired life in India • If as a NRI, you are considering leading your retired life in India, then NPS is a good option for getting monthly pension income after your retirement. Moreover, investment in NPS comes at a low cost compared with other asset classes coupled with attractive returns and flexibility of changing fund allocations.
5) Investment criteria • Any NRI in the age group of 18–65 can invest in NPS, provided you comply with the required KYC norms. Please note that PIOs and OCIs are ineligible to open a NPS account. NRI investors can use a NRE or NRO account to make their NPS contributions. The minimum contribution required for NRI to open a Tier 1 NPS account is Rs. 500. Moreover, the exit rules for NPS state that a NRI investor can withdraw 60% of the contributions at retirement with the remaining 40% going towards an annuity plan.
To get more information for registering for NPS as a NRI investor, Visit https://www.investmentz.com or call us at 022 28584545.