{"id":158,"date":"2018-03-09T07:36:59","date_gmt":"2018-03-09T07:36:59","guid":{"rendered":"http:\/\/www.nritaxservice.in\/blog\/?p=158"},"modified":"2021-03-06T13:15:40","modified_gmt":"2021-03-06T13:15:40","slug":"nris-can-now-continue-their-ppf-account","status":"publish","type":"post","link":"https:\/\/www.nritaxservice.in\/blog\/2018\/03\/09\/nris-can-now-continue-their-ppf-account\/","title":{"rendered":"NRI\u2019s Can Now Continue Their PPF Account"},"content":{"rendered":"\n

Big news is coming for the NRI\u2019s now from the Department of Economic Affairs. A few months ago in October, the 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. Now, the DEA has released an office memo on February 23, 2018, keeping its earlier notification regarding the NRI\u2019s PPF account released on October 2, 2017, in abeyance (or temporarily dismissed).<\/p>\n\n\n\n

An NRI cannot invest in PPF; however, if one\u2019s residential status subsequently changed to NRI, the account was allowed to be run till maturity. PPF is a 15-year scheme, which can be extended indefinitely in blocks of five years. However, for a resident turned NRI, the extension was not allowed.<\/p>\n\n\n\n

According to the 2017 notification issued by the government, PPF (and even National Savings Certificate or NSC) held by an NRI would be treated as \u201cdeemed to be closed with effect from the day he becomes a non-resident\u201d and would keep earning interest rate of a post office savings account. The recent notification is silent on NSC but makes it clear that the earlier diktat has been kept in abeyance till further notice for PPF account held by NRIs.<\/p>\n\n\n\n

The Finance Bill, 2018, has a provision to repeal The Public Provident Fund Act, 1968. All small savings schemes, including PPF, will now be covered under the Government Savings Banks Act, 1873. But individual investors in these schemes need not worry. The finance ministry, in a notification, has stated that \u201cno existing benefits to depositors are proposed to be taken away\u201d and has clarified on the proposed changes to PPF. There are other important amendments that the government wants to bring to the PPF, one of which is to allow premature closure of accounts in case of exigencies, such as medical emergencies or higher education needs.<\/p>\n\n\n\n

PPF has always been the favorite saving scheme for the investors. After all, the principal and the interest earned have a sovereign guarantee and the returns are tax-free. The principal invested in PPF qualifies for deduction under Section 80C of the Income-tax Act, 1961 and the interest earned is tax exempt as well under Section 10.<\/p>\n\n\n\n

PPF is a debt-oriented asset class, i.e., one\u2019s investment is not exposed to equities and hence returns are not linked to the stock market\u2019s performance. The interest rate on PPF returns are set by the government every quarter based on the yield (return) of government securities. In 1968-69, PPF offered a 4 per cent per annum interest, while from 1986-2000 it offered 12 per cent. Today in 2017-18 (Jan 1 to March 31, 2018) it offers 7.6 per cent. A trusted and reliable NRI tax service company<\/a> would provide the best solution for the same.<\/p>\n\n\n\n

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