PPF has been a Darling product for all investors. Even NRIs prefer to continue with their PPF accounts until the time they can, as the product earns them tax-free and safe interest. Even National saving Certificate also is considered a safe and preferred investment by many.
If you are an NRI, then you must be aware of the fact that you cannot open a new PPF account, or invest in National savings certificate. But this was also true that if you had a PPF account or NSC certificate before you become an NRI, then as per PPF account rules and NSC conditions you were allowed to continue with the same till their maturity. Right?
(Read: All you want to know about Public Provident fund)
On 3rd October 2017, Finance ministry in central government has come up with a quiet notification which will force all NRIs to come out of their small saving investments.
GOOD NEWS!!
With Notification dated 23rd Feb 2018, Ministry of Finance has held up the changes in PPF account rules for NRIs.
PPF account rules & NSC rules for NRIs (Before 3rd October 2017)
- NRIs were not allowed to open a new PPF account neither they can make new NSC Investment.
- If a resident having PPF account or a National savings certificate, has become a Non-Resident, then he is allowed to continue with the respective account till the maturity.
- If the PPF account was in an extended status, and later become the NRI, in this case also the investor is allowed to continue the PPF account. But he will not be able to extend the account further for another block of 5 years.
- In both, the above cases NRI was permitted to make a regular contribution to the maximum limit and keep earning tax-free interest like resident investors.
- On maturity of PPF account and NSC, NRIs have to compulsorily close the account.
(Also Read: PPF Withdrawal Rules and Premature closure guidelines)
PPF account rules and NSC rules for NRIs (after 3rd October 2017)
- Though NRIs still can’t open a fresh account, now NRIs cannot even continue with their ongoing PPF and NSC accounts. All accounts in the name of NRIs stands closed on 3rd October 2017
- All NRI PPF and NSC accounts will earn the PPF interest rates until the date of notification i.e. 3rd October, but after that will earn Post office savings bank rate till the time money is completely withdrawn.
- For the “To be NRIs”, their account will automatically be closed the time their residential status changes from Resident to Non Resident.
(You may also Like: 8 important PPF rules every investor must know)
New PPF account rules: What should NRIs do now?
PPF account rules (Amendment 2017) and NSC Amendment Rules 2017, has completely changed the small scheme investments scenario for NRI Investors.
For old investors – You have no other option, but to get your money back and invest in other suitable Instruments.
You must have an idea on Mutual funds, NRE deposits which can get you Tax-free income. Start exploring yourself or consult a Financial Planner
For new Investors – If you have plans to move abroad due to Job or business reasons, which may change your Tax residency status, then better not to get into small saving schemes.
Hello,
I opened my PPF account in 2010 and became an NRI in 2014. Now we are settling India on dec end that means i will be no more NRI. so what will happen with my current PPF account do i need to close the account or i can continue now as it is.
Please throw some light
Regards
Arjeet
I guess as per the new rules, PPF accounts for NRIs are already deemed to be closed since the date of notification and I believe you won’t be able to continue with it after coming back. You will have to open a fresh account.
Still, since this is a new thing and practicalities have yet to be seen, so the picture will be cleared once you are back in December. By the way from IT perspective till 31st March 2018 you will remain NRI as you may not complete total 182 days of stay in India till then.
I recently spoke to ministry of finance, Govt of India to one of the under secretaries. It was confirmed that the government of India has already decided to withdraw the PPF notification for NRIs and they will be able to continue the contributions to PPF as before. Hope the same comes soon. I think NRIs should not rush to close their PPF accounts and loose their money. Also SBI has confirmed that the notification actually gives a retrospective effect to the new rules , which means you loose PPF rate of interest ever since you become an NRI. In my case I became an NRI 10 years back and so I loose interest from 2007, which is ridiculous. I would therfore wait and see what happens.
Thanks for sharing Jabir. Please keep us posted if you get any more information on this.
I recently visited India and met the manager of my bank where I have my ppf account. Though he was aware of the notification, he could not close my account as the bank had not been intimated formally. Has anyone got a similar experience and has anyone been able to close their ppf account.
At least no case is in my knowledge
I opened a PPF account in 1999, became NRI in 2002. Maturity was in 2014 but extended that to 2019. How will my interest be calculated.
Till 3/oct 2017 you keep earning the PPF rates but afterwards the savings bank rate
When the ppf Account was opened, the rules in force at that time, did not specify that in future if the Account Holder becomes NRI then his account shall be closed before date of maturity, and he will earn interest @ post office savings Bank. The rules are amended arbitrarily. The Account Holders should join hands and should be file a Writ Petition against the Government of India for the breach of contract/trust committed by the Government of India.
I have extended my ppf in aril 2019. Iintend to take PR OF canda I sept 2020 .but are the options for me
Additional Query: what is the possible solutions for me or to inform
Since you have already extended your PPF before obtaining the PR of Canada, then you may continue it till maturity. But you cannot extend it further, once you take the PR of Canada.