Rahul (name changed), an OCI cardholder in London, spent an afternoon reading old blog posts, including outdated versions of this one, that told him OCIs couldn’t open an NPS account. He nearly gave up on it. The rule changed years ago. He could have opened one the same week he asked.
NPS has gone through enough revisions that even well-meaning advice online is often several years stale. Here’s where things actually stand.
Must Read – Pension Plan For NRI in India
Who Can Actually Open an NPS Account
Yes, NRIs can open NPS, and can continue an existing account if their status shifts between resident and NRI. Critically, OCI cardholders are also eligible, a rule that has been in place for a while now despite plenty of outdated guidance online still claiming otherwise. Eligibility currently requires:
- Indian citizenship (resident, NRI, or OCI)
- Age typically between 18 and 70 at entry, though PFRDA’s broader “All Citizen” framework extends the ceiling further in some cases; check the current limit before assuming
- Standard KYC compliance
Opening an account no longer requires travelling to India
PFRDA has removed the travel requirement that previously complicated NPS account opening for NRIs, meaning the process can now be completed fully online, without a trip back for verification. If you’d previously ruled out NPS because of the hassle of opening it from abroad, that specific barrier is gone.
Key Features
- Voluntary contribution scheme, invested and managed by PFRDA-regulated fund managers.
- Active Choice: you decide the asset allocation yourself. Auto Choice: allocation is set automatically based on your age.
- Tier-I: the core retirement account, with restrictions on withdrawal. Tier-II: a flexible add-on account you can withdraw from freely, available once Tier-I is active.
How NRIs Open an NPS Account
- Get the application form from the NPSCRA website, your bank, or an authorised Point of Presence – Service Provider (POP-SP).
- Submit the completed form with your NRE/NRO account details and a copy of your passport.
- Track status via NSDL’s portal using your receipt number. Once verified, you receive a Permanent Retirement Account Number (PRAN).
- Start contributing once your PRAN is active.
Must Read – How Much Retirement Corpus Is Enough
Contribution and Withdrawal Rules
| Rule | Detail |
|---|---|
| Minimum to open | Rs 500 (Tier-I), Rs 1,000 (Tier-II) |
| Minimum annual contribution | Rs 1,000 (some sources cite Rs 6,000 as the recommended annual minimum to keep the account active) |
| At maturity (age 60) | 60% lump sum (tax-free); 40% must buy an annuity from a PFRDA-listed insurer, taxed at your slab rate as income |
| Deferred withdrawal | Allowed up to age 70, with continued contributions permitted |
| Small corpus exception | Rs 5 lakh or less at 60: full withdrawal allowed; Rs 2.5 lakh or less before 60: full withdrawal allowed |
| Early withdrawal (before 60) | 80% must go into an annuity |
| Partial withdrawal | Up to 25% of contributions after 10 years, for education, children’s marriage, home purchase/construction, or specified illness treatment |
Check – Best NRI Investment Options in India
Where the Money Actually Goes
- Asset class E: equity-related instruments, higher risk and return.
- Asset class G: government bonds, lower risk and return.
- Asset class C: corporate bonds, moderate credit risk.
- Asset class A: alternative assets like REITs, InvITs, MBS, and similar instruments, higher risk.
Returns are entirely market-driven with no guarantee attached, and accumulate directly into your corpus.
Tax Benefit
An additional deduction of Rs 50,000 is available under Section 80CCD(1B), over and above the standard Section 80C limit, for contributions to NPS.
Also Read – Mr. NRI – Time Is Money When it Comes to Retirement Planning!
Nomination
Up to three nominees can be appointed for both Tier-I and Tier-II accounts at the time of opening.
Should NRIs actually invest in NPS?
On the face of it, NPS looks attractive: flexible contribution, asset allocation control, and a real tax benefit unusual for NRI-accessible products. But it isn’t the most efficient vehicle for everyone. If you fall in a higher tax slab, the eventual annuity income is taxed at your full slab rate, meaningfully more than long-term capital gains would cost on a comparable equity investment. The corpus is illiquid, the domestic annuity market remains relatively underdeveloped, and if you’re young with no clear sense of where you’ll eventually retire, locking a chunk of savings into an India-only, annuity-linked structure may not be the best use of that capital.
If your citizenship status changes again down the line, confirm current closure and transfer rules before assuming anything from an old blog post, this one included.
Weighing NPS against other NRI retirement options?
We help NRIs figure out whether NPS, mutual funds, or a mix actually suits their tax bracket and retirement timeline.
A pension scheme is only as good as the rule set you’re actually reading, not the one that was true three years ago.
💬 Your Turn
Have you opened or managed an NPS account as an NRI or OCI recently? Share what the process was actually like for you.
What is the returns expected in NPS for NRI?
Hii
Gaurav
it depends on you which asset allocation you are taking.
how do I change the status of NPS applicant from NRI to Resident Indian?
Hi Udaya,
There is no required procedure for NPS to update your tax status from NRI to resident Indian. However, on becoming a resident Indian, you must inform your bank (that you have linked with your NPS account) about your change of status within a reasonable time.
What is the maximum amount I can deposit in NPS account per annum
Hi Jay,
There is currently no NPS contribution limit on the number of contributions or the amount of investment an investor can make in an NPS account
Is the amount taxed for NRIs.and the amount to repatriated to other country
Hii Jafu
The annuity received from NPS is taxable.
Withdrawal up to 40% of the accumulated wealth in NPS is exempt from tax at the time of retirement.
I am an NRI aged 63 and having funds in NRE account. I want to invest in NPS and would like to have interest either quarterly or half yearly. What is the scheme and yield
Hii Ramalingam,
NPS is product which provides you monthly pension during retirement based on the corpus you have accumulated in the scheme so far.
Can u tell me the full details of nps scheme
It’s a product for retirement saving and also provide tax benefit. Help you in building corpus to get income post retirement.
What happens to NPS account if Resident Indian becomes NRI? Can he continue to contribute?
Hi Gourav,
NRI can continue that account – status will be changed.
Can you explain National pension scheme
Its’s a government scheme for retirement purpose.
NRI can invest through his NRE account in NPS
Dear Jiya
Yes you can invest in NPS through NRE Account
What nationality I should provide in NRI NPS form ?
Hi Arjun,
You need to mention Indian nationality.
Can OCI holders and citizens of USA invest in NPS?
Hi Niten,
Yes , but Teir-II account is not available for OCI holders.
I want to open a non reptariable NPS account
Hii Subramaniv
Yes you can open, visit the nps website
If I open NPS Tier 2 account as an NRI today and get some funds into the account can I withdraw full amount from it immediately.
Hi Harish,
As per my knowledge no you cannot withdraw the amount immediately.
I WANT TO OPEN NPS
Hi Prasath,
You can open an NPS account by visit the NSDL site.
NPS IS GOVERNMENT
Hi Shakti,
Yes but market linked
As NRI can we open PPF account?
Hi Akash,
No, NRI can not open a new ppf account.
What are the benefits of opening an NPS account and are there any returns monthly or quarterly on the amount invested
Hi Sameer,
It is a pure retirement product. In the product you have a option to choose the pension funds. There is no gurantee returns on it.
Do NRIs have to pay taxes?
Hi Vignesh,
Yes.
how can I join NPS?
Dear Pokkakkillath,
If you have a pan card and a bank account you can open an NPS account online through NSDL.
I want to understand what is annuity investment.
Hi Prateek,
in an annuity investment plan You will receive a fixed amount every month.
I have a savings account in sbi india, but not NRE account working in uganda. Can i open & invest in NPS with the savings acc i have in sbi or NRE acc in mandatory fr it. Please reply.
Hi Sandhu,
as per my knowledge
You can open your NPS account using any of the accounts but it would be advisable to change your residency status in your bank first.
If I am married to a foreigner can I still invest in NPS?
Hi Lamboi,
You can invest in NPS only if your status is resident or If you already have an NPS account then you can continue your contribution.
I am an NRI. I want to invest in NPS. What is the procedure?
Hi Mathew,
If you have a pan card and a bank account you can open an NPS account online through NSDL.
What is the best investment options in USD currency for NRI in Gulf ?
Hi D J,
You should consult with an Investment Advisor in Gulf for this.
I am 58 years old NRI going to retire at 60. Can I go for NPS and get pension from my retirement time. What is the current interest, profit from NPS?
Hi Syed,
As per my knowledge, it is not beneficial to start the NPS after 60 if you are retired.
could you please tell me what is the best investment plan for a person of the middle east tax-free country?
Hi Mahie,
Investment plan should be according to financial goals. You should consult with an Investment Advisor in middle east country regarding this.
As per rule NRIs can open Tier-1 account but not Tier 2 account. What happens to an existing Tier-2 account if someone’s status change to NRI?
Hi Sanjay,
In case you already have a Tier 2 account before becoming NRI, you cannot contribute further. You can exit also, as Tier 2 has no withdrawal restrictions.
How can an NRI OCI holder invest in stocks directly?
Hi Amin,
Yes, they can invest if they have the required accounts.
I feel it is not worthwhile investing in NPS as 40% amount is locked away in annuity. You only have access to 60% that too after the age of 60. There are better placed products in the market.
Thanks Avinash for sharing your views.
Can one continue for 3 more years from 60 and finish off at 63.?
Yes, you can.
Thanks, can it be curtailed to two years?
After the insertion of section 194IB in the finance act, 2017, there is a lot of confusion is arising in the differences between 194I and 194IB.
Hi Ankit,
u/s 194-I, an Individual or HUF is required to deduct TDS on Rent, if tax audit was applicable to him in the immediately preceding financial year. But u/s 194-IB no such criteria is applicable, i.e. those Individual or HUF will deduct TDS who are not subject to tax audit or other than those covered u/s 194-I.
Do NRIs in USA need to declare or pay taxes for their investment in NPS during their tax returns?
Hi Sukhant,
Reporting in US is complex – I will suggest having a word with CPA.
What is the procedure for converting NRE account to RNOR
Hi,
Contact your bank.
how much monthly one can invest, which is best plan to investment
Dear Ritesh,
I will you to check this https://www.wisenri.com/nri-investment-options-in-india/
NRI can invest in NPS but what about Foreign citizen of Indian origin, who have taken foreign passport. They are not classified as NRI, can they invest? Any reliable link or source whether PIO can invest in NPS or not?
Hi Naren,
If you have OCI card you can invest in NPS but my question is why you want to do that?
Possible if someone wants to retire in India
Yup 🙂