Adding value to the OCI card for foreign citizens of Indian origin, the government of India has decided to allow Overseas Citizens of India to invest in the country’s most popular retirement pension instrument. Until before the recent announcement made by the Ministry of Foreign Affairs, the National Pension Scheme (NPS) was a restricted territory for OCI card holders. Till date, an OCI card has mostly been used as a multi-purpose lifelong visa to India for multiple entries and any length of stay.
The OCI is the latest category of investors that the Pension Fund Regulatory and Development Authority (PFRDA) has brought into the ambit of the National Pension System, a tax-saving retirement investment tool. Already available for NRIs, the National Pension Scheme will diversify the privileges that Overseas Citizens of India are entitled to.
As of now, OCI card holders can invest in the NPS Tier 1 scheme. The Tier II account of NPS will not be available to both NRIs and OCIs. The move has been welcomed by various bodies of OCIs in India and abroad. Many individuals of Indian origin, who have renounced Indian citizenship while staying or working in foreign countries, prefer to invest in India. Many OCIs seek investment options to make the most of their income from ancestral properties and other sources in India.
Those OCIs who have returned to India permanently, but continue to hold their foreign citizenship can benefit from the retirement investment avenue like NPS. They were not permitted to invest in NPS unlike NRIs till date, as they gave up their citizenship of India. With the latest relaxation of who can invest in NPS, they can not only build a retirement income support but also reap associated tax benefits.
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The National Pension System is a government-sponsored pension scheme which individuals can make regular contribution to till their retirement age of 60 years. At the time of retirement, they can withdraw the investment and the return on it either in form of annuity payments (pensions) or lump sum. However, the Foreign Exchange Management Act applies to the transfer of the accumulated savings or annuity payments from an NPS Tier 1 account to a bank account outside India.
However, Overseas Citizens of India are still not privileged to hold any public service office, buy agricultural land, and cast their vote during elections in India.