NRI PPF Account, Can NRI continue to invest in PPF? Can NRIs continue their existing PPF Account in India? Can a person continue existing Public Provident Fund or PPF account after becoming NRI? Clarity needed on new PPF rules for NRIs.
There is Lots of confusion among the Non-resident Indians (NRIs) fraternity regarding recent changes notified by the Government of India in Public Provident Fund (PPF) scheme, 1968. State Bank of India (SBI), Post Office and other Private Sector Banks which are authorized to open PPF accounts are flooded with the queries regarding PPF account maintained by NRIs. In this article I will explain the latest PPF rules for NRIs.
7 things to know if you are an NRI and Invested in PPF, NSC or end up losing money:
1. Can NRI person open a PPF Account in India?
2. Can NRI person continue to operate a PPF account opened when he was a resident?
Earlier, NRIs were allowed to operate their PPF account opened when they were resident but were not allowed to extend it. But, with the latest notification dated October 3, 2017 issued by government of India they are no longer allowed to maintain their PPF account once they become NRI.
“….if a resident who opened an account under this scheme, subsequently becomes a non Resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident….”
3. Is there any provision for penalty if NRIs fail to close their PPF account?
No, there is no such provision for penalty if any NRI failed to close their account after this notification. But, the account shall be deemed to be closed and it will cease to earn interest as per PPF Scheme, 1968.
4. What will be the rate of interest for deemed to be closed PPF Accounts?
As the notification reads it will be paid at the rate applicable to post office savings account which is at present is 4 percent.
“…..interest with effect from that date shall be paid at the rate applicable to the Post Office Saving Account up to the last day of the month preceding the month in which the account is actually closed.”
5. From which date deemed to be closed PPF account will earn interest at the rate of post office savings account?
Since the notification cannot give retrospective effects in this scheme, It is understood that if a person became NRI before the publication of this notification, his/ her PPF account shall be considered deemed to be closed from the date of publication of this gazette notification i.e October 3, 2017 and the same account will earn interest at the rate of post office savings account up to the last day of the month preceding the month in which the account is actually closed.
“….subsequently becomes a non Resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident and interest with effect from that date…..”.
6. Is Government going to Tax (TDS in line with NRO SB Account) Interest income earned in deemed to be close PPF accounts?
As of now, there is no such information.
7. Is the investment of NRIs in other small savings instrument safe?
No, the same rules applies to other small savings scheme such as National Savings Certificate [G.S.R. 1238 (E) dated 03.10.2017].