3 weeks ago
NPS for NRIs: Eligibility, Tax Savings, and Withdrawal Rules Explained
The National Pension System, or NPS, is a special savings plan for retirement in India.
Indian citizens who live in another country, called NRIs, can use it to save money for when they grow old.
People called OCIs, who have Indian roots but a foreign passport, can join too.
But people who are just of Indian origin, called PIOs, cannot join right now.
You can put money into a special bank account and get tax benefits from the Indian government.
When you turn 60, you can take out 60 percent of your money without paying tax.
The other 40 percent must be used to buy an annuity, which gives you a small pension every month.
If you take money out before 60, you can only take a small portion and the rest buys an annuity.
If you pass away, the money goes to your family without extra tax.
This plan helps people living far away save carefully for retirement.
The National Pension System (NPS) helps NRIs build a long-term retirement corpus by investing in government securities, corporate bonds, equities, and other asset classes.
Only Indian citizens residing abroad (NRIs) and Overseas Citizens of India (OCIs) are eligible to invest, while Persons of Indian Origin (PIOs) are not permitted.
NRIs can claim tax deductions of up to ₹2 lakh annually under the old tax regime, including ₹1.5 lakh under Section 80C and ₹50,000 under Section 80CCD(1B).
At age 60, NRIs can withdraw up to 60% of their NPS corpus without tax liability, while the remaining 40% must be used to purchase an annuity with taxable pension income.
NRIs cannot open Tier-II NPS accounts, and exiting before age 60 allows withdrawal of only 20% of the corpus, with 80% invested in an annuity.
- Who
- Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) aged 18 to 70
- What
- Eligibility, tax benefits, account rules, and withdrawal rules of the National Pension System (NPS) for NRIs
- Where
- India, under the National Pension System framework for Indian citizens residing abroad
- When
- The article does not specify a date; joining is open to ages 18 to 70, with major withdrawal benefits applying at age 60
- Why
- To help eligible NRIs build a disciplined, tax-efficient, and secure long-term retirement corpus across borders
Key facts
- Scheme
- National Pension System (NPS)
- Eligible investors
- NRIs and OCIs only; PIOs not permitted
- Age limit
- 18 to 70 years
- Required bank account
- NRE or NRO account
- Mandatory account
- Tier I NPS account; Tier II not allowed for NRIs
- Maximum tax deduction
- Up to ₹2 lakh annually under the old tax regime
- Withdrawal at age 60
- Up to 60% tax-free; 40% must fund an annuity
- Early exit before 60
- Only 20% withdrawable; 80% must go to an annuity
Sources
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