Public Providend funds (PPF) of NRI

Non Resident Indian (NRI) cannot open a new PPF account in India. If you inadvertently opened an account after becoming an NRI, it is best to close it before it comes to the attention of the concerned authorities in India. NRI cannot invest in PPF if they don’t have an existing account as NRIs are not allowed to open new PPF account, but if you do have an existing PPF account then you can continue your contribution i.e. you can invest up-to 1.5 lakh INR per year.

Can NRI Invest in Public Provident Fund (PPF) account before the became NRIs?

In 2003, a notification (MOF (DEA) No GSR 585 (E) dated 25.7.2003) was issued permitting NRIs to continue investing in existing PPF accounts till maturity.  if an NRI already has an active PPF account, opened when he was resident then he can continue to invest in PPF. Like other resident investor, he can invest upto Rs.1.5 lakh every financial year. i.e. from 1st April to 31st March.

From which account can an NRI invest in the PPF account?

An NRI can use funds in the NRE account or the NRO account to make investments in the PPF account. It is important to remember that the PPF rules require you to invest at least Rs 500 per financial year in the PPF account. If you fail to make the minimum investment in a year or years your account will be considered dormant. Subsequently, when you want to revive the account, you would need to invest Rs 500 for each year that you missed plus pay up a penalty of Rs 50.”

What happens on maturity?

If you are an NRI at the time the deposit matures, you would need to withdraw the balance. An NRI is not eligible for extension on the PPF account. What happens if you leave the account unattended past the maturity date? “In such cases the account will be considered ‘extended without contribution’ in blocks of 5 years for an unlimited period of time. Extended without contribution means that the NRI will not have to make the minimum yearly investment of Rs 500. His account will continue to earn interest at the prevailing rate. you can remit the maturity amount to the country where you are staying. If you leave your provident fund account unattended then it will be considered as “extended without contribution” and will not fetch any further interest. Also while maturity amount and interest earned on PPF is free from income tax, you may need to pay tax in your country of residence if you decide to remit money abroad.

I had opened a PPF account when I was a resident Indian; now I am a non-resident Indian (NRI). Can I close it before it completes its term of 15 years or will I have to keep contributing each year till it matures?

Premature withdrawal of PPF account or closure before its due date is permissible only in the case of death. A resident-turned-NRI is allowed to invest in the account from your non-resident ordinary (NRO) or non-resident external (NRE) account. Earlier NRIs were not allowed to make contributions into PPF accounts opened before they became NRIs.

Can PPF withdrawals be repatriated? Can NRIs take the money back to their country of residence ?

Yes, the government of India allows USD 1 million per year to be repatriated each year by NRIs. What you can do is park the PPF maturity proceeds in the NRO account and from there repatriate the money to your US dollar accounts.When NRIs were permitted to continue investing in existing PPF accounts in 2003, the permission was on non-repatriable basis, that is, NRIs could not remit proceeds of PPF withdrawal out of the country. Subsequently the RBI announced a Liberalized remittance scheme in 2004 according to which NRIs could remit up to USD 1 million per financial year from the NRO account. Therefore, as of today, you can credit the withdrawal proceeds of your PPF account into the NRO account. And balance in the NRO account can be repatriated abroad up to a limit of USD 1 million per financial year. Of course, you would need to follow certain procedure for such repatriation.

What taxes are applicable on PPF interest?

There are two stages at which there will be a tax implication; one in India and the other in the country of NRIs residence. While interest earned on PPF is exempt in India, the tax treatment for you would be based on your country of residence and will be taxable accordingly.

Taxability of Interest In India

In India, PPF is one of the investments available for deduction under section 80C. That is, if you have income in India (from say rental property), then you can reduce your tax payout in India by investing in the PPF. The interest income as well as principle withdrawals are tax free in India.

Taxability of Interest in the country of residence

You would need to look at the tax rules that apply in the country of your residence. In countries like the US, the interest earned on the PPF will be taxable. PPF does not qualify as a retirement account under the US tax laws and therefore the interest will be taxable in the US.

Procedure for Repatriation of funds from NRE account

Minimum amount for on-line repatriation is INR 5000/- and the request will be rejected if the amount of repatriation is below 5000/- INR.

  • The NRE repatriation request received through Net Banking will be processed within 2 working days excluding Saturdays, Sundays, Indian public holidays, International currency holidays. In case the repatriation request is not processed within the prescribed TAT (i.e. 2 days from the date of receiving the request) then, after completion of 2 working days you can write to the Bank
  • The NRE funds can be repatriated only to the customers’ own/self account abroad. The beneficiary name has to be the same as the name of the account holder. Repatriation of funds to third party is not allowed under this option. The request will be rejected in case of any mismatch in the name of account holder and beneficiary name.
  • Outward repatriation of funds under this option has to be done from the NRE savings accounts only. The request will not be processed if the debit account selected, is PIS/PMS or any other account other than NRE account.
  • The given ‘Forex Rates ( TT selling rate)’ are the indicative rates for today. The forex rates prevailing at the time of processing the repatriation request will be applied.
  • Request received for any payments to OFAC sanctioned countries will not be processed. Hence remittances to following countries cannot be done – Iran, Myanmar, Sudan, Syria, Cuba, North Korea, Somalia. Any payments to partial OFAC sanction countries (Balkans, Belarus, Ivory Coast, Congo, Iraq, Libya, Liberia, Lebanon, and Zimbabwe) will be effected only if the beneficiary & beneficiary bank are not in SDN list.
  • Please Note:-
    • For all GBP remittances – 6 Digits SORT code of Beneficiary Bank in UK is required.
    • For all EUR remittances – IBAN No. of Beneficiary is mandatory.
    • For all AUD remittances – 6 digit BSB No. of Beneficiary Bank is required.
    • For all CAD remittances – Bank code and Transit No. for Beneficiary Bank is required.
  • Applicable charges and taxes for outward repatriation will be deducted from the NRE Savings accounts. In case of insufficient funds in the NRE account towards recovery of the said charges and taxes, the repatriation request will be rejected. Hence, you are required to maintain sufficient funds in the NRE account to avoid rejections.
  • Approximate Charges towards outward repatriation
  • Outward Repatriation Charges Up to USD 500 or equivalent – Rs. 500 + applicable service tax and education cess
  • Above USD 500 or equivalent –
  • Rs. 1000 + applicable service tax and education cess
  • Service tax as per sub rule (7B) of Rule 6 of the Service Tax (Amendment) Rules 2011 For Amount of Currency
  • Exchanged(ACE) up to Rs.100,000 – 0.12% of ACE, minimum Rs.30/-
    – For Amount of Currency Exchanged(ACE) above Rs.100,000 up to Rs.1,000,000 – Rs.120 + 0.06% of incremental amount above  Rs.100,000

– For Amount of currency exchanged above Rs.1,000,000 – Rs.660 + 0.012% of                              amount above Rs.1000,000, subject to maximum of Rs.6000
Service Tax & Education Cess Education Cess @ 3% on the amount of service tax

Fees and charges are subject to change; The Bank may reserves the right to modify the charge schedule without prior notice.

  • Providing the mobile number or e-mail ID here will not result in an update of your mobile number or e-mail ID as recorded with us. In case if your request is rejected, intimation will be sent to your email address or mailing address as updated in bank records.
  • The Bank shall have the recourse and right to recover from you any loss, liabilities and expenses incurred, or paid by the Bank that may arise due to remittance being effected to unintended beneficiary out of the proceeds of your Saving/Fixed Deposit Account(s) and that you will indemnify the Bank from and against such loss, liabilities and expenses.
  • The customer has to ensure that the beneficiary account number and other details that entered are correct.
  • Bank is not responsible for any charges / commission of any kind levied/charged by the Beneficiary Bank or its Correspondence Bank.
  • Repatriation requests received for non FATF countries may not be processed. The bank at its sole discretion may accept or reject requests received for repatriation to such countries. All repatriations/payments are subject to OFAC sanctions and similar regulations. In case of transaction getting rejected due to such regulations, then the loss arising due to exchange rate difference for such transactions has to be borne by the account holder.
  • Maximum amount for on-line repatriation is INR 10,00,000/- per Customer ID per day and the request will be rejected if the amount of repatriation is above 10,00,000/- INR.



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