Top News

PPF Account: If an individual who was previously employed in India moves abroad, will their PPF account remain active? Let’s look at what the rules say.

PPF Account News: Employees working in India hold a PPF account where their provident fund (PF) contributions are deposited. The Public Provident Fund (PPF) is one of the most popular savings schemes in India, offering a government guarantee, secure returns, and tax exemptions. Currently, PPF earns an annual interest rate of 7.1%, and the maturity proceeds are tax-free. However, if an individual moves abroad and becomes an NRI (Non-Resident Indian), the rules regarding PPF change for them.

What happens to an NRI's PPF account?

If an Indian citizen opens a PPF account while employed in India but subsequently moves abroad and becomes an NRI, their existing account can continue until the completion of the 15-year tenure. However, certain rules must be followed, such as:

Depositing a minimum of ₹500 into the account annually.
Depositing up to a maximum of ₹1.5 lakh.
Typically, these deposits are made via an NRO account.

Can the PPF account tenure be extended?

The answer is no! While residents of India can extend their PPF account in blocks of 5 years after the initial 15-year term, NRIs do not have this facility. Upon maturity, an NRI must close the account and withdraw the entire amount.

Can NRIs open a new PPF account?

The direct answer is no! According to PPF regulations, only residents of India can open a new PPF account. Therefore, NRIs, PIOs (Persons of Indian Origin), and OCIs (Overseas Citizens of India) cannot open a new PPF account. Moreover, if a PPF account holder renounces Indian citizenship to acquire citizenship of another country, their PPF account will be deemed closed as of the last day of the month preceding the change in citizenship.

Thereafter, the account will no longer earn the standard 7.1% PPF interest rate; instead, it will earn interest equivalent to that of a post office savings account until the account is fully closed. If your residential status changes to that of an NRI, you must inform the bank or post office; failure to do so could lead to complications at the time of maturity or withdrawal.

Will there be changes to other rules as well?

During the initial 15-year tenure, an NRI will continue to earn the prescribed interest on their PPF account. Additionally, in accordance with the rules, facilities such as availing a loan against the PPF and making partial withdrawals remain available.