PPF (Public Provident Fund) and NSC (National Savings Certificates) are two most popular and common long-term investment options for long-term savings among Indians. The investment in PPF and NSC up to Rs.1,50,000 can be claimed as a deduction under section 80C of Income Tax Act along with other eligible investments. In PPF account, the interest is compounded annually and is credited to the account at the end of financial year. Interest earned on the amount held in PPF accounts is tax-free. Besides the tax deductions, PPF and NSC are the safest saving instruments available as they are backed by the Central Government of India.
PPF and NSC | New rules for NRIs
Recently, the Central Government of India has amended investment rules
relating to the investments by the NRIs (Non-Resident Indians) in PublicProvident Fund (PPF) and National Savings Certificates (NSC). According to
the latest amendment to PPF Act, “If a PPF account holders become NRI (Non-Resident Indian), the PPF
account will be deemed closed even if it has not matured and will earn interest
at the rate applicable to Post Office Savings Account. Similarly, a separate notification
also issued for NSC, if the NSC holder turns an NRI, the NSC shall be deemed to
be encashed on the day he or she becomes an NRI
(Non-Resident Indian) and will earn interest at the rate applicable to Post Office
Savings Account till it is encashed.
PPF and NSC - Rules for NRIs before the amendment 2017
PPF (Public Provident Fund): NRIs cannot open a PPF account. However,
PPF account holder who obtains NRI status after opening a PPF account can
continue to maintain their accounts until it matures.
NSC (National Savings Certificates): NRIs cannot purchase NSCs. However,
NSC holder who obtains NRI status during the tenure of the instrument is
eligible to avail the benefits till maturity of the certificate.
PPF and NSC - New Rules for NRIs after the amendment 2017
As per the latest notification, the Central Government of India has now
made changed in the PPF (Public Provident Fund) and NSC (National Savings
Certificates) rules, whereby the benefit of investment in these saving schemes is restricted to resident
Indians only.
PPF (Public Provident Fund) for NRIs: “If a resident Indian who opened an account under PPF scheme, subsequently becomes a NRI during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he or she becomes a NRI, and interest with effect from that date shall be paid at the rate applicable to the Post Office Savings Account up to the last day of the month preceding the one in which the account is closed”.
NSC (National Savings Certificates) for NRIs: “If a resident Indian having purchased a certificate, subsequently becomes a NRI during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he / she turns a NRI, and an interest shall be paid at a lower rate applicable to the Post Office Savings Account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed”.
Interest in PPF and NSC for NRIs
As per the notification dated 3rd October 2017, “the interest
shall be paid at the rate applicable to the Post Office Saving Account, from
time to time, from such day and up to the last day of the month preceding the
month in which it is actually closed or encashed.”
The above latest amendment to PPF and NSC is a big jolt to a large
number of NRIs who have made investments in these saving schemes. Till now they
used to invest in PPF and NSC up to maturity with high-interest rates. The new
amendment indicates that such accounts may need to be closed or encashed.
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You may also like to read: SBI PPF Account - How to open PPF account in SBI?
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If you liked this article, share it with your friends and colleagues through social media. Your opinion matters, please share your comments.
You may also like to read: Things you should know about PPF account
You may also like to read: SBI PPF Account - How to open PPF account in SBI?
You may also like to read: How to invest in mutual funds online?
You may also like to read: How to set you financial life in order?
If you liked this article, share it with your friends and colleagues through social media. Your opinion matters, please share your comments.
PPF and NSC | New rules for NRIs
Very helpful and informative post.
ReplyDeleteThanks Jyotirmoy, I am glad you liked it.
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