NRI Investment in National Pension System

Investment Opportunity in NPS for NRI

NRI Investment: Strategically planning for post-retirement life is imperative for every individual, whether residing in India or abroad as a Non-Resident Indian (NRI). The retirement phase signifies a shift from a primary cash flow, typically salary, to a reliance on secondary cash flow derived from savings and investments.

NRI Investment in NPS

NRIs aged 18 to 60 have a viable option in India’s National Pension Scheme (NPS), provided they adhere to KYC norms. Contributions to NPS can be made by NRIs from their NRO/NRE accounts.

Functioning as a long-term retirement planning tool, NPS operates on the principle of defined contributions, encouraging systematic contributions throughout one’s working years.

It offers a unique feature of asset allocation, allowing individuals to customize their investment strategy based on risk tolerance and preferences. The investment choices range from equities and corporate bonds to government securities and alternative assets.

Participating in the listed equity capital market through NPS facilitates capital appreciation over the long term, serving as a hedge against inflation. Professional fund managers appointed by the Pension Fund Regulatory and Development Authority manage NPS funds. These managers make informed investment decisions based on market conditions and long-term trends.

NPS holds the distinctive status of being an 3 Exempt product. While NRIs may not avail tax deductions on NPS contributions, they can benefit from the other two Es: contributions earning returns without tax implications and tax-exempt withdrawals.

This tax-efficient structure, coupled with the flexibility of investment choices, positions NPS as a valuable and tailored retirement planning avenue for NRIs.

Also Read: Canara Bank Ordered to Compensate NRI with Rs 5 Lakh

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