Why in News?
According to a notification by the Department of Economic Affairs on Foreign Exchange Management (Non-debt Instruments) Rules, 2019, the OCIs were permitted to subscribe to the NPS.
News in Detail
- Pension Fund Regulatory and Development Authority (PFRDA) has permitted Overseas Citizen of India (OCI) to enrol in NPS at par with non-resident Indians (NRIs).
- However, the option of NPS Tier-II account will not be available for both NRI and OCI subscribers.
- OCI willing to subscribe NPS should be eligible to invest as per the provisions of the PFRDA Act and the annuity/accumulated saving will be repatriable, subject to FEMA (Foreign Exchange Management Act) guidelines.
What is NPS?
- The NPS is a government run pension and investment scheme aimed at providing old age security through safe and regulated market-based return.
- It is regulated by PFRDA and allows its subscribers to contribute regularly during their working life.
- To invest in NPS scheme, it is mandatory for the subscriber to open Tier-I account. On the other hand, Tier-II account is optional.
- The subscribers at the time of retirement can withdraw the money in the form of lump sum withdrawal or annuity payments.
- With the latest addition, any Indian citizen, resident or non-resident and OCIs are eligible to join NPS till the age of 65 years.
- The contributions made towards the NPS are eligible for an additional tax deduction under section 80CCD (1B) up to ₹50,000 which is over and above the ₹1,50,000 limit of deduction available under section 80CCD (1).
- In the Union Budget 2019, the tax exemption limit for lumpsum withdrawal on exit/maturity from the NPS has been increased from the present 40 per cent to 60 per cent under section 10 (12A) of the IT Act.
- The remaining 40 per cent of the corpus is already tax-exempt as it is mandatorily utilised for annuity purchase.
[Source: The Hindu, Economic Times]