The Reserve Bank of India on Thursday notified that non-resident Indians (NRIs) can opt to invest in the National Pension System (NPS), in a move that can boost the corpus of the scheme aimed at providing old-age income security for all individuals.
The move will help boost dollar inflows into the country.
In its notification, the central bank said that NRIs may subscribe to the NPS governed and administered by the Pension Fund Regulatory and Development Authority (PFRDA), “provided such subscriptions are made through normal banking channels and the person is eligible to invest as per the provisions of the PFRDA Act.”
In the last budget, finance minister Arun Jaitley had proposed an additional deduction of `50,000 for investments made in the NPS, making the scheme tax attractive for the large chunk of non-government salaried persons.
The RBI said subscription amounts shall be paid by NRIs either by inward remittance through normal banking channels or out of funds held in their NRE/FCNR/NRO account. There shall be no restriction on repatriation of the annuity or
accumulated savings, the notification added.
Meanwhile, the revenue department said that 5% witholding tax will be imposed on income from off-shore rupee-denominated bonds issued by Indian companies.
To provide additional source of funding, the RBI recently permitted firms to issue rupee-denominated bonds outside India.
Legislative amendment in this regard will be proposed through the Finance Bill, 2016.
According to RBI guidelines, a company can raise up to $750 million per annum under the automatic route through rupee-denominated bonds (popularly known as masala bonds). Beyond this amount, it will require to take prior approval from the central bank.