What happens to PPF account once you become NRI?

POSTED BY priyanka ON March 21, 2018 COMMENTS (77)

Once you become an NRI, what happens to your PPF account? Can you continue it or do you need to close it?

The one line answer is – NO, You do not have to close it, and you can continue it till its maturity.

But there are more details to this.

Last year on 2nd Oct, 2017, govt issued a notification that once a person becomes NRI, his PPF account will be closed on the same day he becomes the NRI and all his money will earn only 4% interest thereafter.

New PPF Notification cancels the older notification

So yes, in Oct last year the rule had changed regarding PPF for NRI. You had to close it once you become the NRI, but recently on Feb 23rd 2018, there was another notification issued that the old notification is on hold now and cancelled till further notice.

Do NRI have to close their PPF account once they become NRI - answer is NO

Which means that the same old rule will be applicable now onwards for NRI investors. An NRI cannot open a fresh new PPF account, but can hold an existing PPF account till maturity.

Lets see few frequently asked questions related to the PPF accounts of NRI’s.

NRI PPF FAQ

Q.1 Can NRI open a fresh PPF account?

As per the change in the amendment of public provident fund, a person can not open a PPF account once his status changes to NRI.

Q.2 What will happen if I’m an NRI and still open a fresh PPF account?

It is possible to open a PPF account for NRI because of the inefficiencies in the system, but before doing that you must be aware that legal actions can be taken by the authority in such cases. You will not get any interest on your PPF account if they find out.

Q.3 What should I do if I have  a PPF account when I was Indian residential and later become NRI?

You do not have to do anything here. You can continue your PPF account till its maturity, but you cant extend it after 15 yrs.

Q.4 Can I contribute to my existing PPF account once I become NRI?

Yes, you can invest in your existing PPF account even after becoming NRI through your NRE or NRO account. You can only contribute till your PPF account matures.

Q.5 How to close my PPF account after it matures?

The steps for this process are as given below:

Step 1: Fill the application form for PPF withdrawal (Form C) and send it to your parents, relatives or friends in India, with an authority letter in which mention it clearly that you are giving that person the authority to withdraw your PPF.

Step 2: That person then will go to the bank where you have your NRE/NRO account and get he documents attached by the the manager and then submits the documents. Bank will accept only the attested documents.

We hope you got a fair idea on the PPF rules related to NRI. Incase you have any queries, let us know in comments section below.

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77 replies on this article “What happens to PPF account once you become NRI?”

  1. Bharani says:

    With the reversal of notification, can an NRI still close the PPF account before maturity as the returns are meagre anyway?

    1. Jagoinvestor Admin says:

      Hi Bharani
      Yes NRI can close their PPF

  2. Rahul Chhabra says:

    I am a NRI and my 15 years of PPF account have completed this year. I understand that I can not extend my account now. Do I need to close the account or can I keep the money in the account and get the interest every year, I will not deposit any money.

    1. Jagoinvestor Admin says:

      Hi Rahul Chhabra
      As per the rule for NRI’s PPF, you should withdraw the money after maturity. If you keep the money in PPF then the account is considered as “Extended without contribution” for the block of 5 years.

  3. Nitin says:

    Hi , I didn’t understand properly , you said NRI will get a Rate of interest for 4% after october but this said notification is in abeyance , so NRI will get the normal rate of interest as residents as per my understanding , can you please clarify if my understanding is wrong ?

    1. Jagoinvestor Admin says:

      Hi Nitin
      It was 4% earlier but now after the changed in rule NRI can continue contributing to their existing PPF and get the interest rate similar to the regular PPF (residential’s PPF). Its just that NRI’s can not open a fresh PPF account.

  4. HH Pandey says:

    Can a NRI make a partial withdrawal from Ppf Account standing at post office and what is the procedure and documentation required, lf NRI is in USA

    1. Jagoinvestor Admin says:

      HI HH Pandey
      Yes NRI’s can make a partial withdrawal from their ppf accounts. the process and documents required will be the same as for a normal ppf account.

  5. Somesh says:

    I am a IT professional in USA on H1 visa (no green card as of now) for few years now, I believe, I am considered a NRI as per Indian Government norms (earlier I used to think, people who “settle” abroad or who have green cards etc are only NRIs). So my query is – what should I be getting as % interest on my PPF account in India now? 4% or whatever the current rate is?

    1. Jagoinvestor Admin says:

      Hi Somesh
      The interest you will get will be similar to the interest rate applicable for Post office savings account at the the time you change your status to NRI.

  6. Pankaj says:

    I am working on ship. Opened my PPF account in 1997. In 2000 become NREI (for tax purpose) as completed 183 days outside India. After that maintained NRI status till 2010. From 2010-2011 FY – stopped working on ship and was resident till 2013-14 FY. Since 2014-15 FY again worked on ship and maintained NRE status. Iam maintaining PPF account till date. 15 years completed on 2012 and now Iam on 5 year extension. Can I continue it.

    1. Jagoinvestor Admin says:

      Hi Pankaj
      You can not extend the maturity period now but you can continue the account till its maturity.

  7. MNDRS says:

    I am NRI in USA. I opened ppf account in 1987. I came to US in 1997 but kept the ppf account alive by depositing the money annually. I have been extending the account after initial 15 years.

    My question is- how much interest rate I will get if I close the account now? I heard that NRI’s will get a low (Savings rate) interest rate “after” they become NRI, according to the ruling in October 2017. However, before the ruling in Oct 2017, they used to get the regular PPF rate. I am assuming NRI’s will get “low” interest rate after Oct 2017. Can you provide some clarification?

    1. Jagoinvestor Admin says:

      Hi MNDRS
      Yes it is true. as per the new rule from October 2017 you will get the interest rate similar to the interest rate applicable for Post office savings account.

  8. MNDRS says:

    I opened ppf account in 1987. I came to USA in 1997 and living in USA and have kept the account alive till now by paying minimum amount. I became US citizen in 2012 and did not realize that I should have closed the ppf account. Now I hear the news about ppf account for NRI’s. I am planning to close the account when I go to India next month.
    My big question is- how much interest rate I will get? I was counting on ppf account as part of my retirement income. Will I get regular ppf interest till 2012 (when I got US citizenship) or Savings interest from 1997 (when I came to US)? In the past NRI’w were allowed to invest in PPF and eligible for the regular interest rate.
    Please provide comments

    1. Jagoinvestor Admin says:

      Hi MNDRS
      You will get the interest similar to the interest rate applicable on Post office savings account from the date you become NRI.

  9. HEMANT DESAI says:

    Dear Sir,
    I AM u.s citizen in 2010…before that I was resident of india.I have PAN card of india & filing tax return in India for my income earned in india & funds recd in inhartance. Now my current status is UScitizan. My ppf a/c has complited 15 years term on 31.3.2018. I have 2 options either to encash it or to continue it without contrbution….Than in 2nd option which interest will be given to me.on outstanding balance ….applicable 7.8% or saving bank interest @4% ?….please clerify till I come back to india & submit claim for withdrawal.

    1. Jagoinvestor Admin says:

      Hi HEMANT DESAI
      You will get the interest rate similar to Savings account. and as an NRI you can not extend the maturity period of your PF account now.

  10. Babu says:

    Dear Sir , Thanks a lot for your kind information in this regard. I have the following queries regarding PPF
    1) as a resident Indian Can I open PPF account for me , my wife and daughter separately or I can open only one account for an entire family of 3 members?
    2) I opened my PPF account in 1994 , I became NRI in the year 2011 ( i.e. on 17th year of my PPF account oepned) and my PPF account completed 20 years in 2014 and I extended it for another 5 years in 2014 ( i.e. before the govt regulation came in Oct 2017) ; can I continue to invest in the same till it matures at 25th year in 2019 ?
    Kindly advice me accordingly

    regards
    Babu

    1. Jagoinvestor Admin says:

      Hi Babu
      You can open PPF account for your Wife and daughter separately.
      As per the new rule you can not extend your PF account but you can continue it till its maturity period.

  11. Pramod kiran says:

    Can a person continue investing in existing PPF account even after he takes up US citizenship and becomes OCI ?

  12. Gopalakrishnan says:

    Hi,
    My PPF account had completed 15 years and I had extended it 4 years ago. 2 years back I became an NRI. How long can I continue investing in the account, get interest and claim 80C benefits?
    Regards
    Gopal

    1. Jagoinvestor says:

      How can I invest means ?

  13. Vareen Ray says:

    Oh good. Thanks for the article. I was planning to close my PPF account which I started before becoming NRI. Now I won’t 🙂

  14. Rajiv Gupta says:

    Technically, a student becomes an NRI while studying abroad. He gets a job in US. Now, he really becomes an NRI i.e. he has to stay back in US for the job. When does it become essential to change the category of bank accounts from ordinary Savings Account to NRI accounts. What happens in case of joint accounts, which were opened when the person was minor & mother operating the accounts as such.

    1. Jagoinvestor says:

      It does not work like that. If you are not in INDIA for 182 days or more, you are an NRI in that case. You need to then convert your accounts to NRE or NRO

  15. Akhil Mishra says:

    After maturity can NRI continue his PPF Account as PPF without contribution thus getting only interest …

  16. Rs says:

    Where can I download form c for POF closure from (link)?

    1. Jagoinvestor Admin says:

      Hi Rs
      You can google it or simply click here https://www.indiapost.gov.in/VAS/DOP_PDFFiles/form/PPFWithdrawal.pdf

  17. Vikram says:

    Hello ,

    What about the contribution in PPF account once someone becomes NRI? Can he still contribute 1, 50, 000 annually till maturity?

  18. ANIL A SHAH says:

    Can he contribute to the PPF account after becoming NRI, the maximum amount which can be deposited, now the figure being Rs.150000/-.

    1. Jagoinvestor says:

      Yes he can invest upto 1.5 lacs yearly !

  19. Ashish says:

    Could you please clarify if NRI needs to deposit minimum amount per year in order to keep the account active ?

    1. Jagoinvestor says:

      Yes he can invest upto 1.5 lacs yearly !

  20. naxita merchant says:

    hello my husband become NRI for 2017-18, but now he dont want to continue working abroad ……..we have changed the status to NRI in demat a/c since he is working in dubai i invested rs 1.5 lac in elss from nre a/c based on his income in india and not continued with ppf, kindly advice what will be his PPF a/c status and will he get 1.5.lac deduction under 80 cc for indian income …..kindly also advice can he continue his PPF a/c for year 18-19 as he will be residence again

    1. Jagoinvestor says:

      Now if he becomes the Resident again, then YES, he will get the benefit !

  21. Dilip says:

    What rules define anyone as an NRI?

    1. Jagoinvestor says:

      Non-Resident Indian (NRI)
      Strictly speaking, the term says non-resident refers only to the tax status of a person who, as per section 6 of the Income-tax Act of 1961, has not resided in India for a specified period for the purposes of the Income Tax Act.[24] The rates of income tax are different for persons who are “resident in India” and for NRIs. For the purposes of the Income Tax Act, “residence in India” requires stay in India of at least 182 days in a financial year or 365 days spread out over four consecutive years AND at least 60 days in that year[25]. According to the act, any Indian citizen who does not meet the criteria as a “resident of India” is a non-resident of India and is treated as NRI for paying income tax.

  22. Hii Sir,
    aThis article is very useful for me….

    1. Jagoinvestor says:

      Thanks for your comment Kaushlendra singh Sikarwar .. Please keep sharing your views like this..

      Manish

  23. Sushil Kumar garg says:

    After maturity of my PPF account, can I keep as it is in bank as it is ,or I have to withdraw the entire amount and keep in the saving bank account.
    Pl advice me.
    Another Advice is needed for my saving bank account and FDR , Senior citizen saving scheme, lying with the bank after I become NRI ?.what change is required as per law ?.

    1. Jagoinvestor says:

      You need to close it .. Otherwise the money will not earn any interest further and its a loss for you in a way !

  24. Sir,
    As per the 23 Feb 2018 amendment, PPF A/C need not be closed till maturity, if a person becomes NRI during the running of his PPF account. Please clarify as to what will be the ROI, he will earn on the deposits, 4% or normal rate applicable?
    Also whether it will be mandatory on his part to contribute minimum amount (Rs.500/-) every year in his PPF account?
    Will he has the option to close the PPF account pre-mature without any penalty?

    1. Jagoinvestor says:

      He will earn normal interest rate ..

      1. KPL says:

        Can the NRI deposit Rs.150000 in the account every year till maturity, if the NRI wants to?

  25. Praveen says:

    Can NRIs continue to contribute to PPF account, if they have it open already?

  26. vipan mahajan says:

    I have already closed ppf account post becoming NRI as per guidelines. Now the directions are reversed, what to do now.

    1. Jagoinvestor says:

      You cant do much now .. You need to start fresh !

  27. Rahul says:

    Can a person who becomes NRI continue to invest/deposit amount in this account?

  28. srinivas says:

    can an individual close his pf account before leaving the country

    1. Jagoinvestor says:

      There is no mention about this point anywhere .. so I dont think so you can do that!

  29. S B Guha says:

    Can a NRI credit some amount to his PPF A/C till its closure?

    1. Jagoinvestor Admin says:

      Hi S B Guha
      Yes NRI can do that.

  30. Sasi says:

    Q.3 What should I do if I have a PPF account when I was Indian residential and later become NRI?

    You do not have to do anything here. You can continue your PPF account till its maturity, but you cant extend it after 15 yrs.

    can continue with contribution upto 1 lakh per year or just continue without any further contribution?

    1. Jagoinvestor says:

      You can contribute upto 1.5 lacs if you wish to !

  31. Renga says:

    Thanks for confirming this, given this is a vital announcement ideally this should be made available in web portals like rbi or finance ministry website or atleast a press release.

    Are you able to confirm from where you got these details?

    1. Jagoinvestor says:

      Its an authentic information and the screenshot I have provided in the article is from the govt sources which is all over the internet. So dont worry !

  32. Harpreet Chanana says:

    Do we need to put the mandatory 500 rupees or 1000 Rs once in every financial year in a ppf account where the account holder later became an NRI…

    1. Jagoinvestor says:

      Its not mandatory, but if you want you can do that !

  33. Vikram says:

    Hello ,

    Can I still make a contribution of Rs 150000 per year , once I become NRI?

    regards

  34. Chandan Kundapur says:

    Hello Manish ,

    Thanks for sharing this info . This is very good news . I was in the process on trying to close my PPF account and was having some servers operational challenges in going about that from outside the US .
    PPF is also one of my favorite saving investment in India and i’m Real glad that the prior notice is on hold . Thanks again for this post

  35. Rohit says:

    Thank you for the article. Can I continue to invest money into PPF after becoming NRI? And will there be 80C benefits? What are the tax implications if I withdraw the amount as NRI?

    1. Jagoinvestor says:

      Yes you can

      There will be 80C benefits but only if you have income in India 🙂

  36. Sam says:

    Thanks a lot for empowering us with critical information. There was lot of confusion going around in this regard.

  37. NAPOLEON says:

    see suppose if a case an Indian national have no PPF earlier when he was working at India, later became an NRI- Japan and now covered under Social Security System (paid over 10 years).
    If he is willing to return to India how to deal this?in such cases how could you simply rule out the possibility of fresh opening of an account?
    around a year before there was a bilateral agreement made between the two for exportability of totalization benefits of SSA

    1. Jagoinvestor says:

      Once you become resident again, then you can open the PPF account !

  38. Deepak Gupta says:

    What happens to the PPF if in a FY be out of country for more that 182 days (say for higher studies abroad); that particular ITR shall not be as Resident. Thanks.

    1. Jagoinvestor says:

      Yes, it should not be

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