October 30, 2019
The Pension Fund Regulatory and Development Authority (PFRDA) has now permitted Overseas Citizens of India (OCI) to enrol in the National Pension Scheme (NPS) at par with Non-Resident Indians (NRIs). The government in a notification on October 17 said that OCIs might subscribe to the NPS provided they were eligible to invest as per the PFRDA Act’s provisions. Their annuity/accumulated savings will be repatriable, subject to FEMA guidelines, said the notification. The OCI is an immigration status — much like dual citizenship — which allows a foreign citizen of Indian origin to live and work in India indefinitely.
Contributions made towards NPS are eligible for an additional tax deduction under section 80CCD(1B) up to Rs 50,000, which is over and above the Rs 1,50,000 limit of deduction available under sec 80CCD(1). In the Union Budget 2019, the tax exemption limit for lump sum withdrawal on exit/maturity from NPS has been increased from the present 40 per cent to 60 per cent under section 10(12A) of the IT Act and the remaining 40 per cent of the corpus is already tax-exempt as it is mandatorily utilised for annuity purchase.
The PFRDA regulates the National Pension System. Notably, NPS was initially notified for central government employees joining services on or after January 1, 2004, and subsequently was adopted by state governments for its employees. The scheme was extended to all to corporates in December 2011 and to NRIs in October 2015.
As on October 26, the total number of subscribers under NPS and Atal Pension Yojana have crossed 3.18 crore and the Asset under Management (AUM) has grown to Rs 3.79 lakh crore. Over 66 lakh government employees have been enrolled under the NPS while over 19.2 lakh private-sector employees have subscribed to the scheme.