PPF Account for NRIs in India (2024)

FAQs

Can an NRI have PPF account in India? ›

As such, an NRI cannot invest in PPF. However, if people with current NRI status, opened a PPF account before they got the NRI status, they can continue with the account until maturity. *All savings are provided by the insurer as per the IRDAI approved insurance plan.

The current interest rate for the quarter 1 July 2021 to 30 September 2021 is 7.1% compounded annually. As per the latest Government regulations, the NRIs are eligible for interest at the same rate on their PPF account. Interest and returns from a PPF account are exempt from income tax in India.

U.S. Taxation of a PPF

The reason that the PPF becomes so complex is because technically, since a PPF is generating interest income and dividends (even though it is not being distributed), it is taxable in the United States.

1.5 lakhs which is the PPF maximum deposit limit. If you extend the PPF tenure beyond 15 years, you can do so by submitting a request with the bank or post office within a year to maturity of the scheme.

Like an ordinary Indian Resident, an NRI can also withdraw a partial amount from the PPF account. But the amount can't be repatriated abroad. The NRI has to spend this amount only in India. However, the NRI can repatriate the maturity proceeds via the NRO account.

NRIs can close the PPF account prematurely after five years. They can also withdraw the money prematurely after five years. However, premature withdrawal is only allowed in the case of your higher education or your child's higher education (provided the child is a primary account holder).

However, it should be noted that the maximum contribution in PPF cannot exceed Rs.1.5 lakh in one financial year. Furthermore, the accumulated amount and interest is also exempt from tax at the time of withdrawal. It is important to note that a PPF account cannot be closed before maturity.

The interest income on funds in an NRO account is subject to tax deducted at source (TDS). A 30% tax on the NRO account, in addition to the applicable cess and surcharge, is levied on the interest income from these accounts.

PPF rules for NRIs

You can continue to invest in the existing PPF Account, i.e., the account opened when you were a Resident Indian. You cannot open a new PPF Account after becoming a Non-Resident Indian. You must close the account after the 15 years maturity period. You cannot extend the maturity period.

Can I invest in PPF as NRI? ›

1. Can a non-resident Indian open a PPF account? No, any person who exists as a non-resident Indian does not qualify to open this account. NRI status disqualifies an individual from opening, operating and managing a PPF account.

The foreign income i.e. income accruing or arising outside India in any financial year is liable to income-tax in that year even if it is not received or brought into India. There is no escape from liability to income-tax even if the remittance of income is restricted by the foreign country.

By investing Rs 2000 per month (or Rs 2000x12 = Rs 24000 per year), you can get up to Rs 7 lakh upon maturity after 15 years.

Ahead of Union Budget 2023, experts have proposed the government to increase the limit of Public Provident Fund (PPF) to Rs 3 lakh. Currently, Section 80C of Income Tax Act provides deductions on various investments up to Rs 1.5 lakh per year from one's taxable income.

You are allowed to make only 12 transactions in a calendar year, and the maximum amount you can deposit in your PPF account cannot exceed 1.5 Lakh in a year.

Further, an individual will earn a higher interest by making a lump sum investment every financial year than monthly deposits in PPF account. If an individual makes a PPF investment of Rs 12,500 before the fifth of every month, the individual will get a maturity amount of Rs 39,44,599.

Only Indian citizens residing in the country can open a PPF account. Individuals over 18 years will meet the age requirement for PPF eligibility. There is no upper age limit for opening a PPF account.

Taxation on PPF returns for NRI

At maturity, once an NRI account holder withdraws the maturity funds from his/her PPF account, the same is credited to his/her NRO account. Therefore, such funds are taxable as per the tax rate applicable on NRO account credits.

The PPF invested amount, interest/returns earned and contributions made, all need to show in FBAR while filing taxes in USA. In India the contributions made to PPF can be claimed as deduction for tax benefit and interest income on PPF is not taxable.

What should NRI do with PF? ›

As per the EPF act, if you are going to become an NRI as you are relocating for a job out of India, you can withdraw the entire EPFs balance immediately, without any waiting period, and close the account! This includes your and your employer's contribution, and the interest earned on that amount.

Therefore, you can extend the maturity of your PPF account to 20 years, 25 years, 30 years, and so forth. However, if you keep your PPF account open without making any deposits for more than a year after maturity, then you won't be able to make any additional deposits in the subsequent years.

PPF has lock-in of 15 years

So, if you open a PPF account in April 2023, it will mature in March 2038. After your PPF account matures, you can withdraw the entire corpus or leave the amount by extending the term for as long as you feel feasible, but that can be extended in blocks of 5 years.

In other words, this means that you cannot deposit more than Rs 150,000 in a PPF account in a financial year. However, there is no restriction on the number of deposits and you can deposit funds in multiples of Rs 50 in your PPF accout and a minimum of Rs 500 per annum.

Earlier, you could deposit funds in your PPF account only twelve times during a financial year. However, per the new PPF rules, there is no restriction on the number of deposits. You can deposit funds in multiples of Rs 50, but, per usual, your maximum annual deposits cannot exceed Rs 150,000.

According to the PPF rules, an individual can have only one PPF account in their name.

Limitations of NRO Accounts

One of the major disadvantages of an NRO account is the cap of USD 1 million on the repatriation of funds. Moreover, the interest income of an NRO account is also subject to taxes.

Am I required to file my income tax return in India? NRI or not, any individual whose income exceeds Rs 2,50,000 is required to file an income tax return in India.

As per FEMA rules, the penalty for not converting a resident account to an NRO account is up to 3 times the amount in the account or INR 2 lakh when the sum is not quantifiable.

What happens to PPF if I don't pay? ›

As mentioned before in the article, the minimum amount that needs to be invested in the PPF account is ₹500. If an individual fails to deposit this amount at the end of the year, their account will be discontinued. When a PPF account is discontinued, no more money can be invested in the account.

Premature closure of the PPF account is allowed only 5 financial years after the account is opened.

You cannot discontinue a Public Provident Fund (PPF) account. You have to deposit a minimum of Rs 500 in a PPF account in a financial year. If you fail to make this yearly payment, a penalty of Rs 50 would be levied each year, along with arrears of Rs 500 for each missed year till the maturity.

Additionally, NRIs are barred from investing in instruments such as currency derivatives and commodities. Apart from these, NRIs cannot participate in intraday trading in the Indian stock markets, unlike resident Indians. They are only allowed to take the delivery of shares.

There is no PPF eligibility age. Minors or persons with an unsound mind can have their PPF accounts provided that a guardian makes it for them. Any Indian citizen can have only one PPF account.

Eligibility: Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can't open a joint account or one for a Hindu Undivided Family (HUF).

If you live in India, you must pay taxes to the Indian government. Unfortunately, this doesn't cancel your US tax obligations. The US has a citizenship-based taxation system, meaning citizens must report their income to the IRS regardless of where they live.

"Although they make up about 1% of American society, they pay about six per cent of the taxes. They're amongst the top producers, and they do not cause problems. They follow the laws," McCormick said in a short speech on the floor of the U.S. House of Representatives.

Assuming an interest rate of 7.1% per annum, the interest earned on an investment of ₹ 5000 in PPF for one year will be approximately ₹ 355. The total balance in the account at the end of the year will be ₹ 5000 + ₹ 355 = ₹ 5355.

How much will I get if I invest 1.5 lakh in PPF for 15 years? ›

If an investor invests 20,000 per month for 10 years at the interest rate of 12%, he will be able to generate INR 47 lakh, i.e., more than double the amount he earned in the first five years. In addition, the earnings in 15 years will double the income that an investor had generated in the first 10 years.

1.5 lakh per fiscal year. Although the maximum amount that can be contributed to the PPF each year is restricted to Rs. 1.5 lakh, making a single contribution of this amount at the beginning of the financial year (on or before April 5th) will result in the interest being added for the entirety of the financial year.

Yes, it is possible to increase your PPF contribution. The current maximum limit for PPF contribution is ₹1.5 lakh per financial year. However, if you have not already reached this limit, you can increase your contribution up to this limit.

Yes, the PPF amount that is received on maturity is tax-free. Under Section 80C of the Income Tax Act, 1961, any investment made towards the PPF account is tax-free. What is the maximum amount an individual can invest towards PPF in a year? The maximum amount an individual can invest in a year towards PPF is Rs.

You cannot deposit more than Rs. 1.5 lakhs in the PPF Account in any given financial year. The deposit frequency, however, is not limited. Earlier, the PPF account max deposit was twelve times in one financial year.

However, a married man can double his PPF investment by opening a PPF account in the name of his wife. This will help the earning individual to invest in PPF up to Rs 3 lakh per annum (Rs 1.5 lakh in self and Rs 1.5 lakh in wife's PPF account).

There is no restriction on the age limit to open a PPF account of a minor. However, a PPF account of a minor can only be handled by a parent/guardian on his/her behalf until the account holder turns 18.

Eligibility: Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can't open a joint account or one for a Hindu Undivided Family (HUF). Also, an individual can have only one account in his name.

Can NRI invest in Indian stock market without PIS? ›

An NRI can invest in Indian stocks through a Portfolio Investment Scheme (PIS) account. A PIS account is required specially when there are foreign funds being used for investment on a repatriable basis. Alternately, NRIs can also use their Indian funds from a NRO account to invest in Indian stocks.

As a rule, one can fully withdraw the PPF account balance only upon maturity, i.e. after the completion of 15 years. Upon completion of 15 years, the entire amount standing to the credit of an account holder in the PPF account along with the accrued interest can be withdrawn freely and the account can be closed.

You are allowed to make only 12 transactions in a calendar year, and the maximum amount you can deposit in your PPF account cannot exceed 1.5 Lakh in a year.

However, there is no bar on residents to open fresh PPF accounts. Hence you can indeed invest in PPF. Even if you were to become NRIs/PIOs again during the currency of the PPF term (15 years), the rules allow NRIs to operate accounts opened when their status was resident Indian.

b) PPF Account For Wife

Whether your wife has her own earning source or not, as she is an individual, can open the account in her name and also be a guardian for kids where you are not a guardian.

NRI's earn well, spend well and in most cases also “save” a decent amount of money every month. Even if one some is saving $2,000 in USA it's close to 1.5 lacs a month after all.

NRI or not, any individual whose income exceeds Rs 2,50,000 is required to file an income tax return in India.

NRO PIS Bank Account and NRO Non-PIS Bank Account allows you to invest an NRIs foreign or Indian earnings in India on non-repatriation basis. While NRO PIS Account is specifically for investing in stock markets, the NRO Non-PIS Account can be used to invest in stocks as well as any other options in India.

Can I trade in India from USA? ›

The prerequisites for a US NRI to trade in the Indian Stock Market are the same as those for other NRIs. To trade in Indian Stock Exchanges, BSE & NSE, a US-based NRI needs: NRI Bank Account. PIS or PINS Permission (mandatory for trading on a repatriation basis)

While trading in equities can be down through NRE or NRO accounts, F&O trading can be done by NRIs only through NRO accounts that are non-Repatriable. Also, NRIs will have to get a Custodial Participant (CP) code before trading in F&O. NRIs can only trade on delivery basis in Indian equities.