Many NRIs have questions related to PPF accounts. Like Can NRI invest in PPF in 2023? And like what are the latest rules of PPF for NRIs, etc.
So I wanted to do a short post on the latest Public Provident Fund (PPF) Rules for NRIs. The idea is to offer some clarity about what is allowed and what isn’t when it comes to PPF for NRIs.
So let’s get straight to the rule of PPF for NRIs (2023).
PPF Rules for NRIs (2023)
As per the new rules for PPF of NRIs:
- An NRI is not allowed to open a new PPF account and invest in it.
- An NRI who already has a PPF account before he/she became an NRI, can continue to hold it till the scheme’s maturity.
- The NRIs can contribute in their PPF accounts till its maturity on a “Non-Repatriation Basis”. That is to say that the fund in PPF account cannot be taken back to the NRI’s country of residence.
- The PPF account of the NRI cannot be extended beyond its 15-year maturity. But if the NRI PPF account is already under the 5-year extension, then it would be allowed to complete the extended tenure and then will have to be closed.
- The PPF interest rate applicable to NRIs will be the same as that of resident Indians. Do check the latest PPF interest rate.
- PPF maturity proceeds are tax-free even for NRI investors
Why is there so much confusion about PPF rules for NRIs living abroad?
It is because of a policy flip-flop by the government.
In October 2017, the government (vide a notification: link) announced that all those PPF accounts for NRI will have to be closed where the PPF account holder had become an NRI. And if they continued with the account, then the interest rate accrued will be reduced to the rate applicable to the Post Office Saving Account.
But after just a few months in February 2018, there was a new circular (link or download here) or NRI PPF Notification 2018 stating that earlier change was kept in abeyance until further notice. So the decision of forced closure of NRI PPF accounts was in a way reversed by the Department of Economic Affairs via this PPF NRI Notification of 2018.
Let me do a simple Q&A to answer a few common questions with regards to Rules for PPF accounts of NRIs:
Q: Can NRIs open new PPF accounts?
A: No, NRIs cannot open new PPF accounts.
Q: Can NRIs continue their existing PPF accounts for NRI?
A: Yes, NRIs can continue their existing PPF accounts which they had opened before becoming an NRI. But the account can only be continued till maturity and not extended any further.
Q: Can NRIs contribute to their existing PPF accounts?
A: Yes, NRIs can contribute to their existing PPF account on a non-repatriation basis. They can only invest up to Rs 1.5 lakh per financial year. Do note that contributions are allowed on a non-repatriation basis so if you do not plan to come back to India after becoming an NRI, then you shouldn’t be investing more money in your PPF account.
Q: I opened PPF account after becoming an NRI. What to do?
A: This is not allowed under new rules. But if you were somehow able to open a new account as an NRI, please get in touch with concerned authorities to sort things out. Why leave it pending for future, isn’t it?
Q: Is PPF interest taxable for NRI?
A: No. Same tax-free (Exempt-Exempt-Exempt) status for PPF for NRIs as it is for resident Indians.
In past, I have already written quite a few posts related to PPF. If you are interested, then you can refer to the below links:
- PPF Interest Rate History
- PPF Maturity Calculator (Free Excel Download)
- VPF Vs. PPF
- PPF Maturity Options (After 15 years)
- PPF Withdrawal Options (Before 15 years)
- PPF Vs. NPS
- ELSS Vs. PPF
- How Interest on PPF Account is Calculated?
- How to save Rs 1 crore in PPF?
- Before 5th Vs After 5th of Month to invest in PPF
So that is about the latest PPF rules for NRIs 2023. I hope it answered your key questions like Can NRI invest in PPF and whether Public Provident Fund or PPF for NRI is suitable or not among many others.