I am a NRI looking at NPS as an investment option. Where do i start?
Start from visiting the link https://www.npscra.nsdl.co.in/pop-sp.php. Here you will find details of Points of Presence (POPs) appointed by the PFRDA. As a NRI you will need to fill up the subscriber registration form and submit the same along with your KYC documents. As a NRI you must pay for your NPS subscription either though an inward remittance from the country of your location through regular banking channels or through funds parked in your NRE or NRO account. If you have a FCNR account, you can use the money to invest in your NPS subscription.
Also do Indian residents have to pay tax at maturity for NPS investments?
As an NPS subscriber you will be taxed when you withdraw your money at maturity and also taxed on the annuity you receive for the remaining sum. At the time of maturity you can withdraw only 60% of the money while at least 40 per cent of your NPS funds must be used to buy annuity. The income will be added to your overall income and taxed as per your tax slab.
Is there a minimum amount required to invest in NPS?
Yes there is a nominal minimum amount stipulated to open an account under the national pension scheme. You can open an NPS account with a minimum contribution of Rs. 6000. NPS is regulated by the Pension Funds Regulatory Development Authority (PFRDA) and the money accumulated is invested through various government appointed fund managers.
What are the recent NPS changes for government employees?
Earlier NPS norms meant that if you are a private sector employee you were free to invest up to 50 per cent of your NPS corpus in equity while the maximum cap was limited to 15% for government employees. With new changes government employees also get an option to invest up to 50 per cent in equity asset classes as is the case with private sector employees.
Your account will be frozen and you will not be allowed to transact until you pay up the minimum balance per year, which is fixed at Rs. 1,000. This was Rs. 6,000 earlier. You also need to pay a penalty of Rs. 100 per year (for all the years you didn’t contribute). You can invest in NPS online.
Go to the NPS website – You need to go to http://www.npstrust.org.in/. Click on ENPS (NPS ONLINE). Go to the Registration link. You have options such as individual subscriber/corporate subscriber, Citizen of India/Non Resident Indian, among others.
Using PAN – If you choose to register using your PAN, you need to choose the bank account to which your PAN is linked. The bank would charge you Rs.125 plus taxes for verifying your Know Your Customer (KYC) norms. This will be debited from your bank account.
Using Aadhaar – In this case, you will be asked to key in your Aadhaar number and a One Time Password will be sent to your registered mobile number for authentication.
Fill in the application form – Details such as your name, date of birth, address and bank account number. The application would also allow you to choose the Pension Fund that you want. You can also choose the asset allocation that you prefer. You will need to upload your photograph and digital signature for completing the form.
Mail the form – This process is not completely online. You need to print the application form and mail it to NSDL within 90 days of filling it.
Meanwhile, you could to open a Fixed Deposit. Click here to compare rate and apply.
The National Pension Scheme is a retirement savings scheme launched by the Indian Government. Under the NPS system, subscribers are allotted a Permanent Retirement Account Number (PRAN) which is unique to every subscriber.
It’s a cost-effective, tax-efficient scheme that enables the subscriber to operate a flexible and portable retirement savings account that operates on the basis of defined contribution. Ultimately, the benefits that the subscribers receive depend on the volume of contributions, returns on these contributions, and the total period for which contributions were made.
Eligibility Criteria for NRIs who Wish to Open NPS Account
NRIs who wish to open NPS accounts must first check whether they meet the following eligibility criteria:
• Age: Between 18 and 60 years old.
• Must comply with KYC norms.
• PIOs and OCIs are not eligible.
• The contributions towards NPS must come from either an NRE account or NRO account.
• Minimum contribution on opening the account: Rs.500.
• Minimum amount per contribution: Rs.500.
• Minimum contribution per annum: Rs.6,000.
Looking for a Fixed Deposit? Click here.