Can NRIs continue their existing PPF Account in India?
Can NRIs continue their existing PPF Account in India?
Recently, I have been receiving messages and emails from NRIs about whether they need to continue their existing PPF account in India or whether we need to close such PPF Account. I thought I can write an article about some of the facts about NRI PPF account management and any limitations towards that. Should NRIs continue their existing PPF Account in India?
9 Facts about NRIs and their existing PPF Account in India
1) NRI’s cannot open new PPF Account
As a guideline, NRI’s cannot any new PPF account in India. Best way is to open PPF Account before NRI’s go on their onsite job / business.
Also Read: How NRI's can invest in Mutual Funds in India?
2) NRI’s can continue existing PPF Account
NRI’s need not close their existing PPF account, but can continue the PPF account which they have opened when they were resident of India. Prior to 2003, NRI's were not supposed to contribute to their existing PPF Account. However with a new notification from Govt. of India, from 2003 onwards, they can contribute to their exisitng PPF account. However there are some limitations on PPF account management by NRI’s.
3) NRI’s can transfer from NRE / NRO account to PPF A/c
NRI’s can transfer money from their NRE account or NRO account to their existing PPF Account. Minimum amount to be transferred per year is Rs 500 and maximum amount is Rs 150,000 per annum.
4) NRI's can repatriate upto USD 1 Million
NRI's can deposit their PPF account maturity in NRO account and can repatriate upto USD 1 million.
5) No special interest rate for NRI's
There is no change in interest rate for existing resident Indians or for NRI’s. Currently it is 8.7% per annum.
6) PPF Maturity extension not possible
Generally, PPF account has a lock-in period of 15 years and it can be extended for another 5 years block period. However NRI’s cannot extend their PPF account beyond 15 years lock-in period. However, if maturity amount is not encashed, it would remain as "non contributable" PPF account. Means one need not deposit minimum of Rs 500 per annum. This is still a question mark as what happens to NRI's PPF account who does not claim the money at maturity of 15 years. It would extend automatically, but they cannot contribute further to the PPF account.
7) No specific tax exemptions
Like resident Indians, even NRI’s would get tax exemption upto Rs 1.5 Lakhs per annum for the investment in PPF account. This way they can reduce their taxable income. Also the Interest from PPF account is tax free.
8) Deposit by 5th April to get maximum Interest
NRI’s can invest Rs 1.5 Lakhs per annum before 5th of April and can get maximum tax free interest for the year. Even every month, interest would be paid on lowest balance between 5th to 30th of every month. Means if you deposit by 5th, you would get interest for that month.
Also Read: What are the investment options for NRI's where they can invest on repatriation basis?
9) NRI's can plan Retirement planning through PPF
In case an individual has plan to go to onsite for job or business for few years, it is better to open PPF Account along with spouse before travelling. This way both can invest Rs 1.5 Lakhs per annum each for 15 years and the investment amount would grow to Rs 94 Lakhs. This is one of the best way to do retirement planning.
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Suresh
Can NRIs continue their existing PPF Account in India
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Hi Suresh
Thank you for the informative article. I have a question. I moved to Singapore 4 months back. Have a PPF account tagged to my SBI Resident account (which means deposit happens from that account to the PPF account, I get to check my balance etc from iBanking and on maturity, the proceeds would get credited to that account). My question is how do I get this associated to a NRO account? Whichever bank I talk to they say that I need to close my existing Resident savings account and then my question is what happens to the PPF account tagged to that account? Nobody is able to guide here.
I have the same issue for my NPS too.
An advise on this would be very useful. Thanks.
Regards
MS Nair
My son is NRI in usa he opened the ppf account in the year 2003 when he was in India and depositing reqd allowable limit for tax saving from income generated in India now it is getting matured in the year 2018 . He became NRI last year can he contribute to ppf ac now .he files income tax return in India as well as in usa .
Please advise
Hi Suresh
Thanks for the excellent article. What happens, if an NRI has extended the PPF account beyond the maturity, in ignorance of the rule? What’s the best recourse?
Singh, Beyond maturity, you need to submit relevant PAN card + address proof (this is what I heard from an NRI), hence Post office or bank can reject the extn request and pay maturity amt
Hi Suresh,
I am working in Singapore for last 2.5 years. My Baby born last week in Singapore but Indian citizen. Can I open an PPF account on behalf of my baby.
Hi DG, As indicated in my article, NRI’s cannot open PPF account.
Extremely informative. I must say got to know a lot through this article, and i think PPF is one way of saving and people get benefit of tax saving on the same. I have taken the Tata AIA life's Smart growth plus plan and it's a very good plan and, it offers flexibility in choosing policy term, has good policy returns and tax benefits u/s 80C & 10(10D).