Public Provident Fund (PPF) continues to be a favourite savings avenue for many investors. The principal and the interest earned have a sovereign guarantee and the returns are tax-free. Therefore, anyone looking for a safe investment option to save taxes and earn guaranteed returns invests in PPF account.
Dure to this reason, NRIs who have opened a PPF account before obtaining NRI status continue to invest lot of money towards their PPF account.
Can a Non-Resident Indian (NRI) open a PPF Account?
Non-resident Indians (NRIs) cannot open a PPF account. However, account-holders who leave the country and obtain non-resident status after having opened a PPF account can continue to maintain their accounts until it matures i.e. until the end of the account's 15 year term. He can contribute the money to his account through NRE/NRO account.
NRIs are restricted from extending account tenures at maturity.
NRI PPF Notification Oct 2017
Department of Economic Affairs (DEA) had said that if a resident, who opened an account under this scheme, and 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 reduced rate of interest rate i.e 4% will be applicable.
Prior to this notification, by maintaining PPF account, NRIs were receiving an interest equivalent to the resident Indians.
NRI PPF Notification Feb 2018
1. The undersigned is directed to refer to this Department's notification GSR No. 1237(E) dated 03.10.2017 regarding amendment in PPF Scheme, 1968. As per the said notification, 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.
2. It has now been decided to keep the said notification in abeyance till the further order in this regard.
What does this latest FEB 2018 notification meant for NRIs?
In simple words, October 2017 Notification is now void and not applicable.
The following rules will apply for NRIs
- NRIs cannot open new PPF account.
- NRIs can maintain their PPF account till maturity and get the same interest rate as given to resident Indians.
- Minimum amount required to keep the account operational is Rs. 500 and NRI can contribute to the PPF account through their NRI or NRO account.
- NRIs cannot extend the PPF account beyond 15 years.