With this, Overseas Citizens of India (OCI)—people of Indian origin holding citizenship of other countries—will be at par with non-resident Indians (NRIs) as far as eligibility for applying for NPS is concerned, the Finance Ministry said on Wednesday.
“…OCI may subscribe to the National Pension System governed and administered by PFRDA, provided such person is eligible to invest as per the provisions of the PFRDA Act and the annuity/accumulated saving will be repatriable, subject to FEMA guidelines," the ministry said in a statement.
The NPS is a government run pension and investment scheme aimed at providing old age security through safe and regulated market-based return. The scheme is regulated by PFRDA. With the latest addition, any Indian citizen, resident or non-resident and OCIs are eligible to join NPS till the age of 65 years.
Contributions made towards the NPS are eligible for an additional tax deduction up to ₹50,000. This is over and above the ₹1,50,000 limit of deduction available under sec 80CCD (1) or tax deductions available to individuals who make contributions under NPS.
Besides, in the Union Budget, the government increased the income tax exemption limit on withdrawal from NPS to 60%, from 40%, on exiting the scheme, effectively making withdrawal from the pension scheme 100% tax-free.
“This is a welcome move for OCIs as there are many individuals of Indian origin who have taken up foreign citizenship while working overseas and may prefer to continue investing in India from their local income sources," Alok Agrawal, Partner, Deloitte India.
“With this relaxation, such OCIs will be able to take advantage of the NPS investment avenue and associated income tax benefits. Repatriation of the accumulated savings/ annuity from the NPS Tier-1 account to a bank account outside India will be governed by the relevant provisions of the Foreign Exchange Management Act," Agrawal said.
As of October 26, total number of subscribers under NPS and Atal Pension Yojana (for unorganized sector) has crossed 3.18 crores and the Asset under Management (AUM) has grown to ₹3.79 trillion. More than 66 lakhs government employees have been enrolled under NPS and 19.2 lakhs subscribers have subscribed to NPS in the private sector with 6,812 entities registered as corporate, the finance ministry said.