The Public Provident Fund (PPF) is a favoured savings instrument for many Indians,
thanks to its tax benefits and secure nature. However, when it comes to Non-Resident Indians (NRIs) and PPF, there’s a cloud of misconceptions that often leads to confusion. Let’s debunk some of these myths:

• Misconception: Many believe that NRIs are not allowed to open new PPF
  accounts.
• Reality: NRIs cannot open a new PPF account. However, if they had a PPF
  account before becoming an NRI, they could continue to maintain it until maturity.

1. PPF Accounts of NRIs Get Closed Automatically:

• Misconception: Once an individual becomes an NRI, their PPF account is
  automatically closed.
• Reality: The PPF account does not close automatically. It remains operational
  until maturity but operates with certain restrictions.

1. NRIs Can Continue to Invest in Existing PPF Accounts:

• Misconception: NRIs can keep investing in their existing PPF accounts without
  any issues.
• Reality: While the account remains active, NRIs cannot make fresh contributions
  to their PPF account once they attain NRI status.

1. PPF Withdrawals are Taxable for NRIs:

• Misconception: The amount withdrawn from PPF by NRIs is taxable.
• Reality: PPF withdrawals remain tax-free in India, irrespective of one’s residential
  status. However, NRIs should check the tax implications in their country of
  residence.

1. NRIs Can Extend Their PPF Account Beyond Maturity:

• Misconception: Like resident Indians, NRIs can also extend their PPF accounts
  beyond the 15-year maturity period.
• Reality: NRIs cannot extend their PPF accounts. Once the account matures, they
  must withdraw the entire amount.

PPF Interest Rates are Different for NRIs:

Misconception: NRIs receive a different (often believed to be lower) interest rate on their PPF accounts.

Reality: The interest rate for PPF is the same for both residents and NRIs. It’s set by the Indian government and is subject to periodic revisions.

Frequently Asked Questions (FAQs) about PPF for NRIs

Q1. Can NRIs open a new PPF account in India?
No, NRIs cannot open a new PPF account. However, if they had one before becoming an NRI, they can continue to maintain it.

Q2. What happens to my existing PPF account if I become an NRI?
You can continue to maintain your existing PPF account until its maturity. However, you cannot extend it beyond the maturity period.

Q3. Are the PPF returns for NRIs taxable in their country of residence?
Tax implications vary by country. It’s advisable to consult a local tax expert regarding the tax treatment of PPF returns in your country of residence.

Q4. Can NRIs withdraw from their PPF account?
Yes, NRIs can make withdrawals, subject to the standard PPF withdrawal rules.

Q5. Is the interest earned on PPF accounts tax-free for NRIs in India?
Yes, the interest earned is tax-free in India, but it’s essential to check the tax implications in the NRI’s country of residence.

Q6. Can NRIs deposit in their PPF account from their NRE or NRO account?
Yes, NRIs can deposit in their PPF account from their NRO account. However, deposits from NRE accounts are not allowed.

Q7. What is the current interest rate on PPF for NRIs?
The interest rate for NRIs is the same as for resident Indians and is revised quarterly.

Q8. Can NRIs extend their PPF account after maturity?

No, NRIs cannot extend their PPF account after maturity, even if it was opened before they attained NRI status.

Q9. Is there a penalty for not depositing the minimum amount in the PPF account?
Yes, a nominal penalty is charged if you don’t deposit the minimum required amount
in a financial year.

Q10. Can NRIs take a loan against their PPF account?
Yes, NRIs can avail loans against their PPF account, subject to the standard PPF
loan provisions.

Q11. How is the interest on PPF calculated for NRIs?
The interest calculation for NRIs is the same as for resident Indians, calculated monthly and credited annually.

Q12. Can I transfer my PPF account to another branch or bank?
Yes, PPF accounts can be transferred between branches or banks.

Q13. Do NRIs need to change the status of their PPF account after becoming an NRI?
No, there’s no need to change the account status. However, certain features and
benefits might be restricted.

Q14. Is a nomination facility available for NRI’s PPF account?
Yes, NRIs can nominate beneficiaries for their PPF account.

Q15. What happens to the PPF account if the account holder passes away?
The balance in the PPF account is paid to the nominee or the legal heir.

Q16. Can two NRIs jointly open a PPF account?
No, joint accounts are not allowed in PPF, whether for residents or NRIs.

Q17. Is the maturity amount from PPF repatriable for NRIs?
The maturity amount can be credited to the NRO account of the NRI, from which
repatriation is subject to certain conditions.

Q18. Can I change the nomination for my PPF account after becoming an NRI?

Yes, you can change the nomination for your PPF account anytime.

Q19. Are there any restrictions on deposit amounts for NRI PPF accounts?

The deposit limits for NRIs are the same as for resident Indians, with a minimum of INR 500 and a maximum of INR 1.5 lakhs in a financial year.

Q20. Can I convert my regular PPF account to an NRI PPF account?

There’s no separate NRI PPF account. If you had a PPF account before becoming an NRI, you could continue it till maturity but with certain restrictions.Rules Governing PPF Accounts for NRIs

The Public Provident Fund (PPF) has long been a popular savings instrument in India, offering attractive interest rates and tax benefits. However, for Non-Resident Indians (NRIs), the rules surrounding PPF accounts have undergone changes, making it essential to be updated. Here’s a comprehensive look at the regulations governing PPF accounts for NRIs:

Account Opening: NRIs ARE not allowed to open A new PPF account. However, if an individual had opened a PPF account while they were a resident of India and later changed their status to NRI, the account could be continued until its maturity.

Account Tenure: The standard PPF account has a tenure of 15 years. For NRIs who had opened their PPF account before becoming an NRI, they can’t extend the account beyond this tenure. Once matured, the funds remain locked and earn interest, but additional contributions aren’t allowed.

Interest Rate: The interest rate for NRIs on PPF accounts is the same as that for resident Indians. It’s set quarterly by the Government of India. However, it’s worth noting that once a person’s status changes to NRI, the interest earned becomes taxable in many foreign countries, depending on the Double Taxation Avoidance Agreement (DTAA).

For example, Raj, who moved to Australia, might have to pay tax in Australia on the interest he earns from his PPF account in India, based on the DTAA between India and Australia.

Contribution Limits: The annual contribution limit for PPF accounts is INR 1.5 lakhs. This limit applies to both residents and NRIs. However, NRIs can’t operate the account or make contributions if the account has matured after 15 years.

Repatriation: The principal amount and interest in the PPF account are fully repatriable for NRIs. However, the process might require additional documentation to prove the change in residency status.

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File No. FS-32/2/2021-FS-DOP
Government of India
Ministry of Communications
Department of Posts
(FS Division)

Dak Bhawan, New Delhi-110001
Dated: 02.03.2022

To
AII Head of Circles

Subject : Relaxation to the account holders who has opened more than one account in his / her name – Amalgamation of PPF Accounts – Reg

Madam / Sir,

Department of Economic Affairs (Budget Division), Ministry of Finance in its OM No. 21212020’NS dated 23.02.2022, has advised not to send any proposal for consideration of merger i.e. amalgamation of PPF Accounts opened under the PPF Rules 2019.

2. In case any one of the PPF accounts or all the PPF accounts is/are proposed to be merged or amalgamated is / are opened on or after 12,12,2019, such account(s) shall be closed without any interest payment and no proposal should be sent to the Postal Directorate for amalgamation of such PPF Accounts.

3. A copy of the OM No. 2/2/2020’NS dated 23.02.2022 is attached herewith for ready reference.

4. This may be circulated to all the sub-ordinate offices.

5. This is issued with the approval of Competent Authority.

(T.C. VIJAYAN)
Assistant (SB-I)

F.No.2/2/2020-NS
Ministry of Finance
Department of Economic Affairs
(Budget Division)

North Block, New Delhi
Dated, the 23rd February 2022

To

1. Ministry of Communication & IT
   {The DDG(FS), Departrnent of Posts}
   Dak Bhawan, New Delhi-110001.

2. Government Business Unit of the Indian Bank

Sub : Regarding relaxation to the account holder who has opened more that one account in his/her name – reg.

Sir,

In partial modification of this Department letter dated 14.02.2022, the undersigned is directed to refer to the case at serial number No.7 of Dr. Anupam Mishra regarding merger of the account No.7003137726 opened on23.03.2021 in Indian Bank, KGM College, Lucknow Branch.

The said account was opened under the PPF Rules, 2019 and therefore, is not eligible for regularization. Accordingly, the account may immediately be closed without any interest payment and the provisions of PPF Rules, 2019 may strictly be complied.

All the operating agencies are further advised not to send any proposal for consideration of merger of PPF accounts opened under the PPF rules, 2019 i.e. on or after 12.12.2019.

This issues with the approval of competent authority.

Yours faithfully,
(A.K.Malhotra)
Section Officer (NS)

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SB Order No. 06/2018
F.No.32-01/2017-SB
Government of India
Ministry of Communications
Department of Posts

Dak Bhawan, Sansad Marg,
New Delhi-110001.
Dated: 28 .05.2018

To,
All Heads of Circles/Regions
Addl. Director General, APS, New Delhi.

Subject: Regularisation of PPF accounts opened in Joint names

Respected Sir/ Madam,

The undersigned is directed to say that vide their OM No. 3/1/2016-NS dated 07.05.2018, the Ministry of Finance, Department of Economic Affairs (Budget Division), New Delhi have informed that the as per the Public Provident Fund Scheme, 1968, a PPF account can not be opened in joint names, i.e. in the names of more than one individual. Ministry of Finance has been receiving references from various Banks and Post Offices seeking regularization of irregular PPF accounts opened in joint capacity. The matter has been, examined in Ministry of Finance afresh and decided that all the institutions (Dept of Posts/Agency Banks) may undertake a one-time exercise to identify PPF accounts opened in joint capacity in contravention of the provisions of the Scheme and forward a consolidated proposal for regularization of all such PPF accounts opened by various Accounts Offices (Post Offices/Bank Branches) under them to DEA/MoF by August 30, 2018. All such joint accounts shall be considered for regularization by converting, them into single accounts in the name of one of the joint subscribers. Banks/Department of Posts are also required to indicate in their proposals the name of one of the joint subscribers in respect of each such account, in whose name the account may be regularized.

2. The Circles are accordingly requested to launch special drives for the purpose to identify PPF account opened in joint capacity, if any & forward a detailed consolidated proposal for the whole of the Circle, for sending the same onward to DEA/MoF seeking regularization. Circles are requested to take up it on Priority arrange to send their consolidated proposal so as to reach this office by 31.07.2018, so that this office may compile & send the same to DEA/MoF by the due date, i.e. 30.08.2018. The DEA/MoF would consider such joint accounts for regularization by converting them into single account in the name of one of the joint subscribers. It should, therefore be indicated clearly in the proposal as to in whole name (for amongst the joint subscribers) the account is to be made single regularized.

3. It may kindly be noted that no request for regularization in such cases shall be entertained after the said deadline & responsibility would lie on the concerned Circle on account of any additional obligation arising out of court cases or otherwise for opening of such irregular PPF accounts.

This issues with the approval of competent authority.

Yours Sincerely,
Sd/-
(P L Meena)
Assistant Director (SB-I)

Source: Dept of Posts

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