NSC & PPF Tax Treatment For NRIs

POSTED BY R ON January 13, 2013 6:33 pm COMMENTS (16)

I had a ppf a/c prior to my NRI stauts;which I closed about 2 years back upon completion of its tenure ( was
NRI by this time) & invested the funds in NSC.What should be done-shall I continue renewing the
NSC or retrieve the money on maturity & deposit in NRO a/c which then shall be subjected to 30%
tax?
Similary, I had invested in NSC in my children’s names before my NRI status but have continued to
renew them. Should these be continued to be renewed or again deposit the maturity in NRO a/c &
subject them to 30% tax?
Kindly advise any possible way to avoid the said taxation.

16 replies on this article “NSC & PPF Tax Treatment For NRIs”

  1. RAJANNA K V says:

    Hi Dear Manish, hope you are doing fine. I need your help to clarify the following please.
    I am an NRI & have my PPF a/c in SBI. My PPF a/c once matured at 15 years & extended for another 5 years. Again it has matured & further extended for another block of 5 years. Apart from this I opened PPF a/c to my minor daughter & I am depositing 1.5 Lacs in her PPF a/c. I also depositing Rs.1.5 Lacs to my PPF a/c through my wife’s SBI a/c as it was sometime back read somewhere in your blog. Please let me know is there any problems in doing so, that is transferring from my wife’s SB a/c to my PPF a/c? Please assist in this regard to avoid any future problems.

    Regards,
    Rajanna K V

    1. I dont think there is any if you are investing your PPF by your wife saving account.

      1. RAJANNA K V says:

        Dear Manish,
        Thanks for your reply, but I am not able to understand the meaning of your ”I dont think there is any if you are investing your PPF by your wife saving account” please let me know whether I can continue to invest into my PPF through my wife’s SB account.

        Rgds,
        Rajanna

  2. RAJANNA K V says:

    Hi Dear Manish, hope you are doing Fine, I request your help to clarify the following please.
    I am an NRI & my only income in India is from house rents. I get an annual rent of Rs.5 Lacs. The question is whether I need to file my IT returns? I am saving Rs.1.5 Lacs in my minor daughters PPF account & after deducting for municipal Tax & 30% deduction in house rent, my Tax payable becomes NIL. Recently I visited an Tax consultant & as per him there is no need to file my IT returns as the Tax payable is NIL. Request you to kindly assist me in this regard as I don’t want any problem in future.

    Regards,
    Rajanna K V

    1. Yes, you need to file returns in India as your income exceeds the taxable limit. If does not matter if tax payable is nil or not. What matters is pre tax income limit.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/pro

      Manish

      1. RAJANNA K V says:

        Dear Manish,

        Thank you very much for your valuable reply. Yes I will file my returns.

        1. Incase you need help of a CA, we have a good connect and many of our readers have taken their service.

          https://www.jagoinvestor.com/pro

          Manish

  3. Dear R, why are you not investing in Debt funds or filing ITR for tax issues?

    Thanks

    Ashal

    1. R says:

      ITR not done as not a compulsory requirement for me. But tried last year for on line filing thru tax deptt website-but content was so confusing -could not decide under which category to apply!! But this year plan to do so, online.Any other way to file it,let me know.
      Do you think debt funds shall be a good strategy for long term considering sure shot downgrade of interst rates in the next 2-3 months?Also, any other good avenues for investing?Pls advise.And is it good time for SIP in equities??
      Thanks
      R

      1. Dear R, when you are investing for long term, does it matter the near term rate movement? Regarding investing in Eq., please check your own risk profile & the time frame. Based upon that, please decide to invest or not to invest. If you are asking the Eq. investment in the light of the run up in Sensex or Nifty level, well my dear friend, you should had invested @ 16-18K level not now. Actually you are not the first one & the last person who is asking this question. The general public like me & you ‘ll keep asking every time after the run up in the market & not before the run up.

        I’m sorry in advance if you feel I’m preaching too much & not helping you out.

        Thanks

        Ashal

  4. BanyanFA says:

    R
    Why dont you file tax returns annually and claim back the tax deducted on your account ? It should be pretty much straight forward return.

  5. interest on NSC is taxable (to be paid each year or at least upon maturity). So if you push it into a NRO account you will have to pay further taxes

    Since the first taxation cannot be avoided I think you could keep renewing the NSC until you need it,

    This article talks about repatriating NSC maturity proceeds

    http://www.investmentyogi.com/nri/nri-investment-options-in-india.aspx

    1. R says:

      My thoughts exactly.Thanks. But taxwise ok?-I mean this is allowable for NRIs to do?

      1. My thoughts exactly.Thanks. But taxwise ok?-I mean this is allowable for NRIs to do?

        Not sure what you are referring to.

        Reg your other questions anytime is a good time to invest in equities. For a goal which is far away you should primarily be invested in equity with a small debt component which could be debt funds.

        For each investment please be clear about tax implications.

        btw your other question in the forum about real estate did not come through right.

  6. Dear R, what’s the query?

    Thanks

    Ashal

    1. R says:

      I had a ppf a/c prior to my NRI stauts;which I closed about 2 years back upon completion of its tenure ( was
      NRI by this time) & invested the funds in NSC.What should be done-shall I continue renewing the
      NSC or retrieve the money on maturity & deposit in NRO a/c which then shall be subjected to 30%
      tax?
      Similary, I had invested in NSC in my children’s names before my NRI status but have continued to
      renew them. Should these be continued to be renewed or again deposit the maturity in NRO a/c &
      subject them to 30% tax?
      Kindly advise any possible way to avoid the said taxation.

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