PFRDA circular on NPS closure for non-residents with renounced Indian citizenship

Nationwide Drug Policing

Posted by AI on 2025-08-25 09:57:40 | Last Updated by AI on 2025-08-26 23:49:32

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 1

---

Latest rules affect NRIs who have surrendered citizenship, don't have OCI cards

The National Pension System (NPS) is a worthwhile investment and pension scheme offered by the Indian government. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), it provides retirement benefits to Indian citizens aged 18 to 70. Even Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI) can invest in NPS to plan their retirement.

Recently, the PFRDA, via a circular dated April 21, 2025, altered the NPS rules for settling the corpus and closing the NPS account for subscribers who have renounced their Indian citizenship and do not have OCI cards.

According to the circular, the NPS subscriber must notify the NPS trust of the change in status along with proof if they have renounced their Indian citizenship and do not have an OCI card.

Closure of NPS Account: If a non-resident has renounced Indian citizenship and does not hold an OCI card, the PFRDA's recent circular states that the NPS account held by the subscriber will be closed, and the entire accumulated corpus or pension wealth will be transferred to the Non-Resident Ordinary (NRO) account only.

Process of Settlement: To process the settlement, one must submit an application for the closure of the account to the NPS along with the following documents:

1. Original PRAN card.

2. Aadhaar card (or any other address document).

3. PAN card.

4. Bank certificate with account details (such as account number, IFSC code, etc.).

After the NPS trust and the Central Recordkeeping Agencies (CRAs) receive the submitted documents, they will process the closure of the NPS account and proceeds, i.e., the corpus accumulated will be transferred to the NRO account, according to the Reserve Bank of India's (RBI) Foreign Exchange Management Act (FEMA) guidelines.

Tax Treatment on Closure of NPS Account by Non-Residents: For the closure of the NPS account (i.e., opting out of NPS), there is an exemption of up to 40% of the contributions made. The money received into the NRO account after closing the NPS account after renouncing Indian citizenship is income earned in India. The credit balances and interest earned on the NRO account are taxable according to the individual's tax slab.

Have you renounced your Indian citizenship? Know this new NPS rule

Go!