As a mark of Prime Minister Modi’s increasing diaspora engagement, the government of India announced October 30 that people having Overseas Citizen of India (OCI) status will now be eligible to apply for the National Pension System at par with NRIs.
Overseas citizens willing to subscribe to NPS should be eligible to invest as per the provisions of the PFRDA Act (Pension Fund Regulatory and Development Authority) and the annuity/accumulated saving will be repatriable, subject to FEMA (Foreign Exchange Management Act) guidelines.
The announcement was welcomed by experts.
News reports quoting a notification by the Department of Economic Affairs on Foreign Exchange Management (Non-debt Instruments) Rules, said last week the contributions made towards the NPS are eligible for an additional tax deduction up to Rs 50,000 which is over and above the Rs 150,000 limit of deduction available under sec 80CCD (1).
According to the Ministry of External Affairs website, "The Scheme (Overseas Citizenship of India Scheme) provides for registration as Overseas Citizen of India (OCI) of all Persons of Indian Origin (PIOs) who were citizens of India on 26th January, 1950 or thereafter or were eligible to become citizens of India on 26th January, 1950 ,except who is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may, by notification in the Official Gazette, specify.”
OCI is an immigration status permitting a foreign citizen of Indian origin to live and work in India indefinitely. It was introduced in response to demands for dual citizenship by the Indian diaspora, particularly in developed countries.
According to a Live Mint report, experts have welcomed the move to allow Overseas Citizen of India to invest in NPS.
“This is a welcome move for OCI as there are many individuals of Indian origin who have taken up foreign citizenship while working overseas and may prefer to continue investing in India from their local income sources," Alok Agrawal, partner at Deloitte India, was quoted as saying in Live Mint.
It said quoting Agrawal that some overseas citizens have also returned to India permanently, while continuing to maintain their foreign citizenship. As these individuals did not retain India citizenship and therefore did not qualify as NRIs, they were not allowed to invest in NPS.
“With this relaxation, such OCIs will be able to take advantage of the NPS investment avenue and associated income tax benefits," he added.