PPF account of NRIs to remain openThe Government has suspended its earlier notification declaring the Public Provident Fund (PPF) accounts of Non-Resident Indians (NRIs) to be ‘deemed closed’ from the date of change of residential status.

This means PPF accounts of NRIs will remain operational and earn the same rate as resident Indians.

NRIs cannot open PPF accounts, however, the situation is somewhat complex when it comes to accounts opened by resident individuals who subsequently became NRIs.  

The earlier scenario

The PPF Accounts opened when the individual was a resident Indian (who subsequently becomes an NRI) were allowed to continue. NRIs were allowed to keep contributing to them and they were given the same interest rate as resident Indians. However, they were not allowed to extend the PPF account after maturity (15 years from the year of opening).

The previous change

The Government issued a notification declaring such accounts as ‘deemed closed’ from the date of change of residential status. They would earn only the savings bank account interest (4%) from the date of change of status.

The new change

According to an order by the Department of Economic Affairs, the government’s previous notification (dated October 3, 2017) has been kept in “abeyance” till further orders, allowing NRI PPF accounts to remain operational and earn the same rate as resident Indians.

Other changes such as premature closure have been proposed for PPF accounts under the Government Savings Promotion Act. You can read about them here.

National Savings Certificates

The new change does not apply to National Savings Certificates (NSCs) purchased when an individual was a resident (and subsequently becomes an NRI). These will continue to be ‘deemed closed’ and earn only the savings bank account interest, in accordance with the government’s previous notification.

Also Read

Govt announces premature closure and other benefits for PPF, small savings

PPF will be safe from income tax, creditors’ attachment, says Government

Employee Provident Fund rate cut from 8.65% to 8.55%

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.