Wednesday, May 29, 2019

Can NRIs Open NPS (National Pension Scheme) Account in India - Tax Saving Investment

Yes, NRI can now invest in NPS or National Pension Scheme in India. Recently, on July 2015, PFRDA, the Pension regular has clarified that Non Resident Indians (NRIs) can invest in National Pension Scheme (NPS) to save for their retirement and get a social security cover. Earlier, there was some confusion whether NRIs are allowed to put money on NPS or not, but given that NRIs are allowed to invest in mutual fund and insurance, RBI and PFRDA give clarification that NPS is also an eligible investment for NRIs.

This is really positive news for lacs of NRS living outside India, especially those who are living in Gulf country, as they don't have any kind of retirement benefits or social security cover. They can now save some money for their old age by building their retirement funds and investing in NPS for regular pensions.

NPS stands for National Pension System and all Indian citizens of age 18 years to 60 years are eligible to open NPS account including NRIs. Let's see the eligibility criterion and some important features of NPS.

Eligibility Criterion to open NPS Account
Any Indian Citizens including NRI between age 18 to 60 years can open NPS account with banks.

Documents required for opening NPS account
Submit the NPS subscriber registration form with KYC documents to any bank which are authorized to accept and open NPS account e.g. ICICI and SBI bank. You need following documents

  • ID proof e.g PAN card, Aadhar Card, Voting ID, Driving license
  • Address proof e.g. electricity bill, bank passbook with photo and address, Aadhar card
  • 2 passport size photographs

Import Features of NPS account
Here are some of the key features, advantages, and benefits of NPS account:

1) Investment in NPS is eligible for tax exemption under section 80C.

2) NPS invest your money on different pension funds, which further invest in equity, debt or gold depending upon their investment strategy. An NPS subscriber can choose between following 8 fund managers

  • ICICI Prudential Pension Fund Management Co. Ltd.
  • HDFC Pension Management Co. Ltd.
  • SBI Pension Funds Pvt. Ltd
  • UTI Retirement Solutions Ltd
  • Kotak Mahindra Pension Fund Ltd.
  • LIC Pension Fund Ltd.
  • Reliance Capital Pension Fund Ltd.
  • Pension Fund (PF) to be incorporated by Birla Sunlife Insurance Co. Ltd

You must select at least one Fund Manager for your NPS account.

3) Similar to PAN numbers, You will get a PRAN (Permanent Retirement Account Number) once you open an NPS account. This is a unique number and it remains with the subscriber throughout his lifetime.

4) NPS is regulated by PFRDA with transparent investment norms, regular monitoring and performance review of fund managers by NPS trust.

Most of the big banks like ICICI, HDFC Securities, SBI, Kotak Mahindra, Axis bank all allow you to open and invest on NPS online, you can check their respective portal for more details e.g. If you want to open NPS account with ICICI bank, just see here

Benefits of NPS why open account

That's all on whether NRIs can open NPS account or not. Yes, an NRI can invest on NPS but contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time. If the subscriber's citizenship status changes, his/her NPS account would be closed as well. So, if you are not getting any social security benefit or worry about your retirement fund, I suggest you open NPS account and start making a periodic contribution on NPS for your old age income. PM Modi has also launched Atal Pension Yojna, you may want to check that as well.

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