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PPF account will be closed in case of change of status to NRI

A new notification has been issued by the Government of India (GoI) stating that if the holder of the PPF (Public Provident Fund) account becomes NRI (Non – residence of India) would be closed without the account reaching its maturity period.

This notice was issued earlier this month in the official gazette which states the above mentioned information.

The amendment to the PPF Scheme, 1968, says:

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 non-resident

This decision has been taken as according to the rules of PPF, NRIs are not permitted to invest in schemes like the National Savings Certificate (NSC), Public Provident Fund (PPF), and Monthly Income Schemes and other time deposits offered by the post office.

The Public Provident Fund (PPF) scheme, is a tax free savings scheme introduced by the Ministry of Finance (MoF) and it was launched in order to encourage savings habit among the Indians and create a retirement corpus.

PPF is a long term savings and tax savings instrument in India, and is administered by the provisions of Public Provident Fund Act 1968. Deposits made towards the PPF account is eligible for deduction under Income Tax Act and the interest earned on it is exempted from tax.

There are other eligibility criteria’s of this for say, this scheme is only for Residents of India who are above 18 years of age or above than that as there is no upper age limit to open an account in PPF. Also, HUF (Hindu Undivided Families) or NRIs (Non – Resident of India) or Foreigners are excluded from the scheme.

Investing in PPF is one of the best investment options as it acts as a good option for a long term investment scheme. The maturity period is 15 years and minimum lock – in period is 7 years. Moreover, the interest rate also gets annually compounded. It is also one of the most tax efficient, affordable and the most popular retirement scheme in India. Not is the interest rate tax – free but the withdrawals are also taxed deductible.

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