NPS for NRI

Table of Content

1. Key Features of NPS for NRI Account

2. Secure Your Retirement with Our Pension Plans

3. Benefits of the National Pension Scheme for NRIs?

4. Eligibility Criteria for NPS for the NRI

5. How to Enroll in the NPS Scheme for NRIs

6. What are the Investment Options in NPS for NRI?

7. Tax Advantage of NPS for NRIs

8. What are the Withdrawal Rules for NPS

9. How NRIs Can Invest in NPS?

10. Conclusion

11. FAQs on NPS for NRIs

The NPS for NRIs is a government-backed retirement saving scheme governed by the Pension Fund Regulatory and Development Authority (PFRDA). It permits Non-Resident Indians between 18 and 70 years to open an NPS account through either an NRE or NRO bank account in India. 

The system aggregates contributions and invests them in a variety of asset classes, including equity, corporate bonds, and government securities, to strike a balance between risk and return. NRIs can either decide their own asset allocation through the Active Choice route or have it automatically adjusted according to their age through the Auto Choice route. The aim is to create a secure pension corpus in India for retirement years.

For instance, an NRI aged 30 opens an NPS account using their NRE account in India. They choose the Active Choice option, allocating 50% to equities for growth, 30% to corporate bonds for steady income, and 20% to government securities for safety. 

Alternatively, if they opted for Auto Choice, the system would automatically reduce equity exposure as they approach retirement, ensuring lower risk with age while steadily building a secure retirement corpus. 

Therefore, regular contributions over decades, even with modest amounts, accumulate into a significant pension fund. At retirement, subscribers can withdraw 60% tax-free and convert 40% into an annuity.

Key Features of NPS for NRI Account

NPS for NRIs offers portability across countries, flexible contribution options, choice of asset allocation between equity, bonds, and government securities, and limited partial withdrawal facilities. The account serves NRIs with varying income levels and global mobility, and it remains valid even after they return to India, ensuring seamless continuity of retirement planning.

Here are the key features of NPS for NRI accounts, which can help in making an investment decision:

1. Flexible Travel Options

Portability in NPS ensures the account remains active irrespective of where the NRI resides. This offers unmatched convenience compared to many financial products that may require closure or transfer upon relocation. 

NRIs can make seamless contributions through NRE or NRO bank accounts from anywhere in the world, enabling continuous investment in retirement planning. Each subscriber receives a unique Permanent Retirement Account Number (PRAN) that remains fixed and unchanged even if the NRI moves between countries. 

Moreover, if the NRI permanently returns to India, the same NPS for NRIs account continues under resident status without the need for closure or opening a new account. This feature greatly benefits globally mobile NRIs, ensuring uninterrupted, long-term, and consistent retirement savings management.

An example of this is an NRI who opened an NPS account in India but works in Singapore. They shifted to the UK, where they worked for a few years. They retained their NPS account under the same PRAN even after changing countries and contributed through their NRE account. There was no requirement for transfers or closures that would interfere with the retirement savings.

2. Taking Care of Your Portfolio

NPS enables NRIs to diversify investments across equities, corporate bonds, government securities, and alternative assets. Furthermore, investors can customise their asset allocation based on risk appetite or opt for auto-adjustment as they age. This diversification balances risk and return, helping achieve steady, long-term portfolio growth for retirement security.

• Equity

Equity investments under NPS for NRIs provide exposure to stock market–linked instruments, offering potential for higher long-term returns. Investors can allocate up to 75% of total contributions to equities.

The system automatically reduces this exposure as the investor approaches retirement age, lowering risk levels in later years. This option suits NRIs with higher risk tolerance who aim for long-term capital appreciation. 

Since market performance affects equity returns, subscribers should periodically review their fund manager's performance and adjust their allocations as needed. This ensures the portfolio remains aligned with both risk appetite and retirement goals while optimising growth opportunities effectively. 

In the case of an NRI who is 30 years old, they invest in NPS, allocating 75% of their contributions to equities. The portfolio increases tremendously in the next 20 years when markets perform well. Moreover, the equity exposure decreases automatically as the investor approaches retirement, thereby reducing risk and preserving the gains that have been accumulated. This ensures a balanced approach to growth and capital protection.

• Corporate Bonds

Corporate bond investments under the NPS for NRIs involve allocating funds to high-rated bonds issued by reputable Indian companies, offering a moderate risk compared to equities. These instruments typically provide steadier returns, making them suitable for balanced investors seeking both capital growth and financial stability. 

Additionally, corporate bonds may generate regular interest income, making them appealing to NRIs seeking predictable cash flows alongside retirement savings. However, bond performance is influenced by interest rate movements in India, meaning returns can fluctuate when economic conditions shift. Therefore, NRIs are advised to periodically review their corporate bond allocation in response to changing interest rate trends to optimise portfolio performance.

For example, an NRI invests 40% of their NPS corpus in corporate bonds issued by top-rated Indian companies. Over the years, these bonds have provided steady interest income and moderate capital appreciation. When interest rates decline, bond prices rise, resulting in higher returns. Furthermore, the investor reviews performance annually, adjusting allocations as economic conditions change to maintain portfolio stability and growth.

• Government Securities

Government securities within NPS for NRIs involve investing in Indian government bonds and treasury bills, offering the lowest risk among all asset classes. These instruments safeguard capital but typically generate relatively lower returns compared to equities or corporate bonds. They are particularly suitable for conservative NRIs prioritising capital protection over aggressive growth. 

Acting as a stabiliser, government securities help protect the portfolio against market volatility, ensuring steady performance during uncertain times. However, many long-term government securities involve extended lock-in periods, so NRIs should balance allocations in their NPS Scheme for NRIs with more liquid assets to maintain flexibility while securing the stability needed for retirement planning goals. 

For example, an NRI allocates 30% of their NPS portfolio to Indian government bonds for capital safety. During periods of stock market volatility, these bonds provide stability with predictable interest income. While the returns remain modest compared to equities or corporate bonds, the investment protects principal value, ensuring the retirement corpus stays secure despite market fluctuations.

• Alternative Investment Options

 Alternative investment options under NPS for NRIs include Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and the Alternative Investment Fund (AIF) category. They offer NRIs exposure to unconventional assets beyond traditional equities and bonds, with the potential for higher market-linked returns. However, these assets carry greater risks and are heavily influenced by market conditions.

For a balanced financial plan, the aggressive allocation to NPS alternatives must be strategically coupled with adequate life insurance protection. This ensures that while the NRI seeks diversified growth for their retirement corpus, the family's immediate financial security is guaranteed through a substantial term insurance plan cover, which acts as a robust financial safety net. Experts, therefore, recommend allocating only a small portion (up to the PFRDA-specified limit) of the NPS portfolio to these high-risk alternatives. This approach strikes a balance between the potential upside from market-linked growth and the need for stability and predictability in long-term retirement planning objectives, secured against unforeseen events by the life cover.

For example, an NRI allocates 10% of their NPS portfolio to REITs and InvITs for diversification, while simultaneously holding a high-sum term insurance policy. When real estate and infrastructure sectors perform well, these investments boost overall portfolio growth. However, during economic slowdowns where returns fluctuate sharply, the limited exposure is manageable, and the family's core needs remain shielded by the separate, predictable payout of the life insurance cover.

Benefits of the National Pension Scheme for NRIs?

1. Tax Benefits¹

NRIs contributing to NPS are eligible to claim tax deductions under the Income Tax Act 1961¹. These include benefits under Section 80CCCD(1) up to overall ceiling limit of ₹1.5 lakh per financial year. NRIs can also claim an additional ₹50,000 under Section 80CCD(1B)¹, depending on their residential tax status in India for the relevant financial year, making the total deduction to claim up to ₹2 lakh per financial year. The deduction is available only against income taxable in India.

At retirement, as much as 60% of the NPS corpus withdrawn as a lump sum is generally tax-free. The rest (40%) taken towards annuity purchase is not taxed, however pension received from annuity plan is taxable under prevailing Income Tax Rates. Additionally, NRIs can claim benefit for TDS on annuities under Double Taxation Avoidance Agreements (DTAA) to avoid double taxation as per Section 90 & 91 of the Income Tax Act, 1961¹. 

Also, tax-free maturity proceeds can be repatriated outside, providing ease of handling global retirement finances effectively.

For example, an NRI contributes ₹1.5 lakh annually to NPS, claiming deductions under Sections 80CCD(1) and 80CCD(1B) 1 against income taxable in India. At retirement, they withdraw 60% tax-free and use the remaining 40% to purchase an annuity. Moreover, tax-free proceeds can be repatriated after applying TDS which is also subject to DTAA benefits, , ensuring efficient management of global retirement funds.

2. Long-Term Financial Security

Regular contributions to NPS for NRIs enable them to build a substantial retirement corpus systematically. It ensures long-term financial security even while residing abroad. 

The NPS scheme for NRI has market-linked returns, spread across equities, corporate bonds, and government securities. They provide potential to outpace inflation and generate real wealth growth over time. At retirement, NRIs have flexible withdrawal options, including the option for a lump sum payout. They also purchase a mandatory annuity to secure a steady income stream after retirement.

Furthermore, pension calculators effectively eliminate the future value of the corpus and plan contributions. Together, these features ensure sustained financial stability, enabling NRIs to meet their retirement expenses with confidence. They also allow NRIs to maintain financial independence throughout their retirement years in India.

3. Flexibility and Portability

NPS for NRIs offers significant flexibility, allowing them to choose their investment portfolio, select fund managers, and determine their asset allocation. This is based on their risk appetite and financial objectives. 

Subscribers can switch fund managers or adjust asset allocation once a year, enabling better optimisation of returns. Furthermore, partial withdrawal options are available for specific purposes such as education or medical needs. They ensure liquidity without disturbing long-term retirement planning.

Portability allows NRIs to manage their NRI NPS account online from anywhere globally, across employers or cities, ensuring uninterrupted savings. Together, these features deliver control, convenience, and adaptability, empowering NRIs to manage their retirement corpus.

4. Lower Costs

NPS enables NRIs to begin retirement savings with a minimal initial contribution of just ₹500 for the mandatory Tier I account. They can also open the optional Tier II account with ₹1,000. NRIs get complete flexibility in terms of contribution frequency. They can invest any number of times during the year based on financial convenience.

Additionally, NPS for NRIs features extremely low fund management charges, typically ranging between 0.01% and 0.1% per annum. This makes it one of the most cost-effective retirement planning products available. Furthermore, these low costs ensure that a greater portion of contributions remains invested. This maximises the potential for long-term corpus growth and enhances financial security for NRIs during retirement years.

For example, an NRI opens a Tier I NPS account with ₹500. They also open a Tier II account with ₹1,000. The NRI contributes periodically throughout the year, at their convenience. With fund management charges as low as 0.01%–0.1% annually, most contributions stay invested, maximising long-term corpus growth and enhancing retirement financial security.

5. Higher Returns

NPS offers NRIs market-linked returns managed by professional fund managers. They allocate investments across equities, corporate bonds, and government securities to effectively balance risk and reward. 

These diversified asset classes provide the potential to generate inflation-beating returns over the long term, ensuring real wealth growth for retirement planning. Historically, NPS returns have ranged approximately between 9% and 15%, depending on market conditions, fund performance, and the chosen asset allocation strategy. 

By leveraging professional management and disciplined investing, NRIs can efficiently grow their retirement corpus while minimising individual effort. This makes NPS a reliable and growth-oriented option for securing financial stability during post-retirement years in India.

For example, an NRI can invest in NPS, with fund managers allocating contributions across equities, corporate bonds, and government securities. The diversified portfolio has historically generated market-linked returns of 9%–15%, helping the subscriber grow their retirement corpus efficiently. Moreover, it helps to overcome inflation and secures long-term financial stability with minimal personal management effort.

6. Partial Withdrawal for Specific Goals

Partial withdrawal under NPS for NRIs allows access to up to 25% of their total contributions after completing three years of active participation. This facility can be obtained for specific purposes such as children’s education, marriage expenses, medical treatment, or other critical financial needs. 

The withdrawal request can be initiated online, provided that the necessary documentation and approval are obtained from the authorities. Moreover, while this feature under NPS for NRIs offers liquidity for urgent requirements, the remaining corpus continues to stay invested, ensuring retirement planning remains on track. This balance between short-term financial needs and long-term wealth creation makes NPS a practical and flexible retirement savings option.

An NRI with three years of service to NPS wants to withdraw half of the money to educate a child, for example. The authorities process the online application upon receiving the documentation. Therefore, the rest of the corpus continues to grow, ensuring that retirement planning remains uninterrupted and financially stable in the long term.

7. Repatriation of Funds

Repatriation under NPS for NRIs allows them to transfer their accumulated retirement savings, either fully or partially, to a foreign bank account in their country of residence, subject to Reserve Bank of India (RBI) regulations. This facility simplifies cross-border fund management, addressing practical challenges faced by globally mobile individuals. 

Repatriation applies to both Tier I and Tier II accounts. However, Tier I withdrawals remain subject to retirement-related restrictions as per NPS for NRI rules. This feature enables international accessibility while maintaining compliance with Indian laws. It ensures that NPS savings remain convenient, manageable, and aligned with the long-term global financial planning needs of NRIs.

For example, an NRI residing in the UAE chooses to repatriate a portion of their NPS corpus to their local bank account. While Tier I withdrawals are subject to retirement restrictions, the transferred funds offer easy access abroad, ensuring global financial convenience while remaining compliant with Indian regulations and retirement planning goals.

Eligibility Criteria for NPS for the NRI

NRIs have to fulfil certain specifications set out in the scheme to qualify to invest in the scheme. The eligibility criteria for NPS NRI are given below:

• The applicant should be between 18 to 60 at the time of opening the account.
• An NRE or NRO account is mandatory.
• The NRI should comply with NPS KYC norms prescribed by the PFRDA. All the required KYC documents have to be submitted.
• NPS for NRI is an individual account and cannot be opened on behalf of a third person. 
• The subscriber should have a valid PAN card..

How to Enroll in the NPS Scheme for NRIs

Investment in NPS for NRI is prudent in NRI financial planning. You should open an NPS account to start the contribution. It is possible to open NPS for NRI accounts both online and offline. 

If you are confused about how to open NPS account NRI, follow the procedure given below for a seamless experience:

Online

This is a convenient option to enroll in the NPS scheme for NRIs from anywhere across the world.

• Access the eNPS website.
• Under the applicant’s status, choose Non-Resident Indian.
• For the account type, choose between repatriable and non-repatriable.
• For the option for registering, choose the permanent account number. Provide the PAN number, country of residence, passport number, and bank details.
• Complete the application with essential details.
• Upload scanned copies of passport, PAN Card, photograph, signature, and cancelled cheque.
• Use any of the payment gateways provided and make a payment of Rs. 500 for the NPS Tier I account NRI and Rs. 1000 for the Tier II account.
• Take a printout of the completed online application form.
• Affix your signature and send it to the Central Recordkeeping Agency within 90 days of registration.
• Your account will be frozen if the CRA does not receive your application within the specified period.

Offline

If you are not comfortable with the online process and can visit the service providers personally you can adopt the offline method to enroll for the scheme.

• Visit any bank branch designated as a Point of Presence (POP) under the National pension system for NRI.
• Collect the application form for NPS for NRI account.
• Complete the form with the required details and affix your signature.
• Submit a copy of the PAN, passport, address proof, cancelled cheque, and photograph along with the application.
• Submit the application form at the designated counter along with Rs. 500 for the Tier I account and Rs. 1000 for the Tier II account.
• The POP will review your application and the documents and issue a Permanent Retirement Account Number (PRAN) and a welcome kit.

What are the Investment Options in NPS for NRI?

NRIs can invest in NPS through the following investment options:

• Tier I (mandatory, retirement-focused with restricted withdrawals).

• Tier II (optional, flexible withdrawal) accounts require a minimal initial deposit. 

Furthermore, based on retirement goals and liquidity needs, subscribers can choose between Active Choice (self-directed asset allocation) or Auto Choice (age-based automatic allocation) investment strategies for optimal portfolio management.

• Active Choice

Active Choice under NPS for NRIs enables subscribers to determine the exact percentage allocation of their contributions across equities, corporate bonds, government securities, and alternative investment options. Equity exposure can be as high as 75% initially, but it automatically reduces by 2.5% each year after age 50, reaching 50% by age 60 to lower the risk. 

This approach provides NRIs with greater control over their retirement portfolio. Furthermore, it allows them to align their investments with their individual risk appetite and return expectations. 

While professional fund managers handle day-to-day investments, the strategic allocation decision rests with the subscriber. This offers a customised balance between growth potential, capital preservation, and long-term retirement security in the NPS scheme for NRIs.

For example, a 35-year-old NRI allocates their NPS contributions with 60% in equities, 25% in corporate bonds, 10% in government securities, and 5% in alternative assets. As they turn 50, the equity allocation automatically reduces by 2.5% annually, reaching 50% at age 60. 

While fund managers handle daily investments, the NRI’s strategic allocation ensures the portfolio aligns with personal risk appetite, optimises growth potential, and preserves capital, creating a customised, long-term retirement corpus that balances higher returns with financial security throughout their retirement planning horizon.

• Auto Choice

Auto Choice is the default NPS for NRI investment option, offering three lifecycle funds: 

1. Aggressive (LC-75)

2. Moderate (LC-50)

3. Conservative (LC-25)

Each fund starts with equity exposure of 75%, 50%, and 25% respectively, at age 18. It gradually reduces to 15%, 10%, and 5% by age 55, automatically lowering risk as retirement approaches. This hands-off approach is professionally managed, striking a balance between growth potential and risk mitigation throughout the investor’s career. 

For example, a 25-year-old NRI selects the Auto Choice Aggressive (LC-75) fund for their NPS account. Initially, 75% of contributions are invested in equities, with the remaining allocated to corporate bonds and government securities. 

Over the years, equity exposure gradually decreases to 15% by age 55, automatically reducing risk. This professionally managed, hands-off approach allows the NRI to benefit from market-linked growth while minimising portfolio management effort. 

Without frequent adjustments, their retirement corpus grows steadily, combining growth potential with risk mitigation to provide long-term financial stability and ensure a structured, age-adjusted investment strategy aligned with their retirement goals.

Note: Auto Choice is ideal for NRIs seeking convenience, requiring minimal intervention while ensuring their retirement corpus grows in a structured, age-adjusted manner. It provides long-term financial stability without constant portfolio management.

Tax Advantage of NPS for NRIs

The following are the main tax advantages provided by NPS for NRIs. These include:

Tax Benefits to Self-employed:

For self-employed taxpayers, contributions to the National Pension Scheme qualify for tax deductions under Section 80 CCD (1) of the Income Tax Act, 1961. Existing NPS subscribers can avail deductions of up to 20% of their gross total income earned from Indian sources.

Tax Benefits to Employee:

For employee taxpayers, contributions to the National Pension Scheme qualify for tax deductions under Section 80 CCD (1) of the Income Tax Act, 1961. Existing NPS subscribers can avail deductions of up to 10% of their salary earned from Indian sources.

Deductions can be claimed under 80C, 80CCC and 80CCD(1) of Income Tax Act, 1961 but the total deductions cannot exceed Rs 1.5 lakh a year for all the investments put together as per provision of Section 80CCE.

Additional Tax Benefits:

NRI subscribers can avail an additional Rs. 50,000 tax deduction on their yearly contributions as per the provision of Section 80 CCD 1(B). This limit is over and above the Rs. 1.5 lakh limit under Section 80CCE1. Additionally, NRIs may be required to submit a FATCA Declaration for reporting foreign financial assets and accounts, in compliance with international tax laws.

What are the Withdrawal Rules for NPS

NPS withdrawals for NRIs are primarily permitted after age 60, with early exit allowed under specific conditions. Withdrawals depend on corpus size, annuity purchase requirements, and PRAN regulations. NRIs must also consider tax implications and repatriation rules to ensure retirement planning remains flexible, compliant, and aligned with their long-term financial goals.

1. Before Retirement (Early Exit)

NPS allows early withdrawal before retirement only if the account has been in active participation for at least 10 years. Exceptions include accounts with a small corpus of less than ₹1 lakh or in the event of the subscriber’s death. There are two early exit options: 

• Full Withdrawal: The entire corpus is withdrawn.

• Premature Exit: Involves partial withdrawal with mandatory annuity purchase for the remaining amount. 

These provisions ensure that NRIs can access funds when necessary while maintaining the scheme’s core objective of long-term retirement savings. This will provide financial security, balancing liquidity needs with sustainable growth of the corpus.

A 12-year NPS account for an NRI needs funds to cover a medical emergency. Since the account qualifies for a 10-year minimum, they demand a premature withdrawal of 25% of their investments. This is because the remaining corpus is invested in buying an annuity. 

It will enable one to access required funds instantly without jeopardising long-term retirement security. In a different case, a corpus of less than ₹1 lakh in an account will allow complete withdrawal irrespective of the tenure. 

These regulations also allow for greater flexibility in accommodating urgent financial needs. However, the majority of the pension corpus would remain on steady growth to secure future financial security.

2. At Retirement (Normal Exit)

NPS for NRIs' normal exit is permitted once the subscriber reaches 60 years of age, with an optional extension of contributions up to age 70. Upon retirement, the corpus is divided into two components: 

• Lump Sum Amount Withdrawal: 60% can be withdrawn as a lump sum, which is generally tax-free.

• Remaining Amount Withdrawal: The remaining 40% must be used to purchase an annuity, providing a steady, lifelong income stream which shall be taxable in the hands of the assessee as per the individual tax slab rate under the head “Income from Salary” or “ Income from Other sources” as the case maybe as per the Income Tax Act, 1961, subject to DTAA benefits available

This structure ensures that NRIs gain immediate access to a significant portion of their retirement savings. Simultaneously, it secures a dependable, recurring income for post-retirement financial stability, aligning with long-term retirement planning and peace of mind.

Suppose an NRI attains 60 and decides to take a normal exit out of his/her NPS account. Their accumulated corpus is subject to a tax-free withdrawal rate of 60% as a lump sum to cover debts and short-term expenses. The remaining 40% is invested in purchasing an annuity that will provide a stable stream of monthly income during retirement which shall be taxable. 

Alternatively, they may give contributions until the age of 65 to further enlarge the corpus. This NPS scheme for NRI guarantees both short and long-term financial planning. This planning is dependent on a steady income to sustain their financial needs, as they have part of their savings immediately and will have a consistent, scheduled income later on.

3. After Retirement

After retirement, NPS subscribers can continue to stay invested for up to 15 years by submitting a deferment request to the pension fund. Two post-retirement options are available, which are: 

• Deferring Withdrawal: This option allows the corpus to remain invested and continue growing.

• Phased Withdrawal (Systematic Life Withdrawal): This enables gradual withdrawals over time.

These facilities offer NRIs the flexibility to manage their retirement income according to personal financial needs while continuing to benefit from market-linked growth. By utilising deferment and phased withdrawal options, NRIs can get the following benefits:

• Optimise retirement planning

• Balance immediate income requirements

• Maintain long-term financial stability for sustained post-retirement security

Considering the example of an NPS for NRIs who retire at the age of 60 with an NPS corpus of 50 lakh. They request a deferment to continue the investment for another ten years. Furthermore, they opt for the Phased Withdrawal plan, where they withdraw ₹ 2 lakh a year. The rest of the corpus is invested in equities, corporate bonds, and government securities. 

This would enable the NRI to have a stable income to spend on living, and they will enjoy the growth, which will be market-oriented. The subscriber can offset short-term financial requirements by sacrificing a part of the corpus and consistently saving a certain sum of money. This will guarantee him financial stability over a long period once he retires.

How NRIs Can Invest in NPS?

Any Non-resident Indian (NRI) between the ages of 18 and 60 years as of the date of submission of their application can invest in the National Pension Scheme (NPS). However, some rules are applicable for NRIs to invest in NPS:

• Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs) are not eligible to open an NPS account.
• You need to have either an NRE account or an NRO account to transfer funds to your NPS account.
• NRI subscribers have to contribute at least Rs. 6000 to their Tier 1 NPS account in a financial year; otherwise, their accounts will be frozen. 

Conclusion

Planning for retirement at age 60 and beyond is essential for NRIs to ensure financial security, maintain lifestyle standards, and meet future obligations. The NPS for NRIs offers numerous advantages, including market-linked returns, tax benefits under Sections 80CCCD(1) and 80CCD(1B) of the Income Tax Act, 1961, flexible investment options, and global portability. 

Regular contributions, even if modest, can grow into a substantial retirement corpus, with the help of retirement calculators to estimate future income. Furthermore, at retirement, annuity options provide a reliable post-retirement income stream, while life insurance acts as a complementary tool to protect family and enhance overall retirement planning. 

NPS also allows partial withdrawals for specific goals before retirement, offering liquidity without compromising long-term savings. Additionally, NRIs can repatriate funds to their country of residence. This gives them the benefits of low costs and professionally managed investments, making NPS a cost-efficient and comprehensive retirement planning solution.

FAQs on NPS for NRIs

Q. Is NRI eligible for NPS?

Yes NRIs are eligible for an NPS for NRI account if they are between 18 to 60 years of age. Complying with the PFRDA KYC norms is mandatory. The NRI should have a valid PAN and submit a copy of the PAN card while opening the account.

Q. What happens to my NPS account after I become NRI?

You can continue the NPS account if you become an NRI. However, the contributions to NPS NRI should be routed through an NRE or NRO account. You will have to change the status of your bank account to a Non-resident account or open a fresh NRE or NRO account, and subsequent remittances to the NPS account should be from any of these accounts.

Q. What happens to NPS if I become OCI?

If you become OCI, your citizenship will change. According to NPS guidelines, the NPS account should be closed upon citizenship change. However, you can open a fresh NPS for the NRI account and start saving for your future in the new account.

Q. What is premature withdrawal from NPS for NRI?

Premature withdrawal from NPS for NRI is withdrawing the amount before maturity i.e., before retirement or attaining 60 years of age. The NPS guidelines stipulate a minimum contribution of 5 years from the account opening date to withdraw the funds before maturity. Also, only 20% of the corpus can withdraw in lump sum. The remaining 80% goes to an annuity plan for a regular income.

Q. What happens to NPS if I quit my job?

You can continue the NPS account even if you quit your job. Portability is the advantage of an NPS account. It can be transferred between sectors, and if you take up a new job the contributions will come from the new employer. However, if you decide to quit your job and start a business, you can continue the account but the subscriptions should be done on your own as your employer will no longer remit the contributions.

Q. What are the tax benefits of NPS for NRIs?

You can invest up to 20% of your gross income in an NPS for non-resident Indians account and avail an amount up to Rs. 1.50 lakhs as tax deduction under Section 80CCE of the Income Tax Act 1961. Additionally, you can invest up to Rs. 50,000/- and get tax benefits under Section 80CCD (1B)¹.

Q. Can NRI open NPS account and invest in it?

Yes, any NRI between 18 and 60 years of age who complies with the country’s KYC norms are eligible to open an NPS account at any Indian bank or post office. 

Q. Is NPS Tier 2 available to NRIs?

Yes, NRIs can open a Tier 2 NPS account only if they already have a Tier 1 NPS account to make voluntary contributions. NRIs have to make at least one deposit in their Tier 2 account worth at least Rs. 2000 in a year.

Q. Is tax benefit under Section 80CCD available to NRIs?

Yes, Tax benefit for contributions to NPS is available to both Indian residents and NRIs, if opted for Old Tax Regime.

Q. Can an NRI invest in NPS?

Yes, NRIs can invest in the National Pension System (NPS) in India. You will be eligible to open NPS accounts using NRE and NRO bank accounts if you are between 18 and 60 years old. The National Pension Scheme for NRIs allows contributions across equities, corporate bonds, and government securities. Moreover, it offers long-term retirement savings, tax benefits, partial withdrawals for specific financial goals, and repatriation of funds to their country of residence.

Q. Can foreigners open an NPS account in India?

No, only Indian citizens, including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI), are eligible to open an NPS account. Foreign nationals who are not of Indian origin cannot subscribe to any NPS for NRI scheme. Hence, NPS is specifically designed to help NRIs build a retirement corpus in India with tax benefits and government-regulated investment options.

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