Can an NRI open an NPS Tier 2 account?

Read on to learn about the eligibility criteria for NRIs to invest in NPS accounts

Can NRIs open NPS Tier 1 & Tier 2 accounts?

The National Pension System (NPS) is an initiative of the Government of India to extend pension benefits to all Indian citizens, whether resident or non-resident (NRI). Non-resident Indians can have both an NPS Tier 1 and Tier 2 account if they have a PAN card and a bank account and are 18-60 years old.

While an NRI's Tier 1 account can be opened online by visiting the website of any of the three Central Recordkeeping Agencies (CRA) - Protean (NSDL), KFintech and CAMS, a Tier 2 account cannot be opened online or until the NRI is physically present.

To open the Tier 2 account, an NRI needs to get in touch with a point of presence (POP). Points of presence are intermediaries who help in opening an NPS account, and their list can be accessed here.

There is no restriction on making withdrawals in a Tier 2 account, but the investment is not eligible for tax benefit. Only NPS Tier 1 account investments are eligible for tax deduction under Section 80C of the income tax act. In addition to a deduction of up to Rs 1.5 lakh, an additional deduction of up to Rs 50,000 is available under section 80CCD (1B) on investing in NPS Tier 1.

To open an NPS Tier 1 account, if the NRI has an Aadhaar and their mobile number is registered with the Aadhaar database, the process is quite simple. The demographic details and the photograph is fetched automatically after an OTP authentication. In addition, one needs to upload a scanned copy of their signature, PAN, passport and a cancelled cheque. The NRI must also have the details of their Non-Resident External Account (NRE) and Non-Resident Ordinary (NRO) account. They can open the NPS account on both a repatriable and non-repatriable basis. While the repatriable account does allow transferring the maturity proceeds and pension money to a foreign country, the non-repatriable account does not.

Also read:

An essential guide to National Pension System (NPS)

Which is the best NPS plan?

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