ULIPs and mutual funds are two popular yet distinct investment avenues, each coming with its unique set of benefits and drawbacks. Know which one is better for your individual needs and preferences.
Investing in India has become an attractive option for non-resident Indians (NRIs) over the years. With India being one of the fastest-growing economies globally, NRIs are keen to explore investment opportunities in the country and participate in its growth story.
Additionally, the favourable exchange rate and the availability of multiple investment options have further fueled their interest in investing in India. One such investment option that has gained popularity among NRIs is the Public Provident Fund (PPF) account.
A PPF account offers a secure and long-term investment opportunity with attractive interest rates and tax benefits. However, as an NRI, it is essential to understand the rules and regulations related to opening and operating a PPF account.
In this article, we will cover the rules for PPF accounts for NRIs and highlight the eligibility criteria, investment limits, and other essential aspects to help you make an informed investment decision.
Public Provident Fund (PPF) is a financial instrument that helps individuals mobilise savings by providing an investment plan with considerable returns combined with income tax benefits. This is a government programme that needs a minimum deposit of INR 500 and a maximum deposit of INR 1,50,000 per year. Usually, a PPF has a tenure of 15 years, during which you would need to make an investment every year. Towards the maturity date, you would be able to create a corpus for your long-term financial objectives.
It is, however, important to note that this investment facility is only available for Indians residing in the country. Non-resident Indians or NRIs are not allowed to open a PPF account in India. However, they can make new investments in their current PPF account which they opened when they were Indian citizens. Even when they are investing in the current PFF, they need to make contributions on a non-repatriable basis till the PPF account matures.
As per the recent PPF rules for NRIs introduced in 2018, NRIs cannot open a PPF account in India. However, if they already opened an account when they were an Indian resident, they can continue making investments in the account even after the residential status changes.
When it is said that the contributions need to be made on non-repatriation grounds it means that any transfer of the PPF account, be it interest or principal, to the country of residence, is not allowed. The contribution to these PPF accounts for NRIs is allowed only up to the date of maturity. Once the PPF for NRI reaches its maturity, only then can an NRI repatriate the amount.
Some other things to remember with respect to NRI PPF accounts are as follows:
Usually, Indian residents have the flexibility to extend the PPF deposit by 5 years post its maturity date. So once the PPF account matures after the standard tenure of 15 years, you can extend the maturity period by 5 years as an Indian resident. However, it is mandatory for NRIs to close their account after the maturity period ends, as it cannot be extended at all.
To withdraw or close the NRI PPF account, an NRI needs to visit the bank branch where they have opened the account. At the branch, they would need to present a duly filled-in PPF withdrawal form, passbook, cancelled cheque, and photo ID proof. The corpus earned over the years will be transferred to their Non-resident Ordinary (NRO) account.
Here are the steps to be followed to close an NRI PPF account if the concerned NRI cannot come to India and needs to send a representative to the branch -
Listed below are the special rules for the premature closure of PPF Accounts for NRIs:
Discussed below are some alternatives to NRI PPF accounts in India -
As an NRI, you cannot open a PPF account in India. You can, however, continue to contribute to a PPF account that you opened when you were an Indian resident. It is important to note that these contributions are non-repatriable. Furthermore, unlike Indian residents, you cannot extend the duration by 5 years once your PPF account for NRI matures.
While you cannot open a new PPF account for NRIs, you can certainly explore alternate investment options such as fixed deposits, direct equity, mutual funds, real estate, and national pension schemes.
|Top LIC Short Term Investment Plan||Pravasi Pension Scheme for Non-Resident Keralites|
|LIC Pension Premium Calculator||Mutual Funs for NRI|
|Best Pension Plan||Best LIC One-time Investment Plan|
|Top Short Term Investment Plan in India||Best sip investment for 5 Years|
|Best Child Education in india||Mutual Fund Calculator|
|Difference between annualized and absolute returns||Annuity Calculator|