Now Reading: NRIs can invest in NPS but not in RBI floating rate bonds
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NRIs can invest in NPS but not in RBI floating rate bonds
Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are eligible to open a National Pension System (NPS) Tier I account, says the Economic Times. Contributions must come from an NRE or…
The Story in Brief
Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are eligible to open a National Pension System (NPS) Tier I account, says the Economic Times. Contributions must come from an NRE or NRO account and comply with KYC norms. Persons of Indian Origin (PIOs) cannot invest. The NPS offers tax deductions of up to Rs 2 lakh a year under Sections 80C and 80CCD(1B) of the old tax regime. Up to 60% of the corpus can be withdrawn tax-free at age 60; the rest must buy an annuity.
However, NRIs cannot invest in RBI Floating Rate Savings Bonds 2020 (Taxable), the Economic Times adds. If a resident becomes an NRI while holding the bond, they may keep it but repatriability of proceeds follows FEMA rules. The bond pays 8.05% interest, is taxable, has a 7-year tenure, and a minimum investment of Rs 1,000.
The Indian Opinion
Two government-backed products, two different rules for NRIs. The NPS welcomes them with tax breaks; the RBI bond shuts them out. This inconsistency feeds a narrative that India’s NRI investment framework is ad hoc. The real test is practical: will the tax deduction on NPS contributions actually help an NRI who has little Indian income? And will the residence country tax the annuity? Clear, uniform rules would serve everyone better than piecemeal eligibility.
Sources (2): economictimes.indiatimes.com, economictimes.indiatimes.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
