PPF for NRI: Can NRI Invest in PPF? NRI PPF Account Rules

Public Provident Fund (PPF) is one of the most trusted long-term investment options in India, known for its tax benefits and guaranteed returns. But what about NRIs? Can NRIs invest in PPF?

The primary reason for this ambiguity of information is that rules relating to PPF for NRI were amended in 2018.

If you’ve recently moved abroad or are planning to, this guide will clarify the confusion about PPF for NRIs and what the rules say.

What is PPF?

A PPF is a government-backed savings scheme that encourages long-term investment. With a minimum deposit of ₹500 and a maximum of ₹1.5 lakh per financial year, it offers a safe return (currently 7.1% for Q1 of FY 2025–26) and tax benefits. 

While it’s a great tool for resident Indians, things get a bit complicated when it comes to the PPF account for NRI.

PPF Rules for NRI

Can an NRI invest in PPF? The following are the rules and conditions introduced in 2018 for NRIs investing in PPF. 

• An NRI cannot open a PPF account in India. 
• However, a resident Indian can open a PPF account and can become an NRI at a later date. Such a person can continue to hold the PPF account until maturity. They can continue making contributions until the 15-year maturity period ends; however, extensions beyond this duration are not allowed.
• On maturity, i.e. after completion of 15 years, the PPF account for NRI must be closed. You can’t leave it idle or keep contributing.
• If the NRI does not comply with the rules and leaves the account open, no interest is payable after the maturity period. Moreover, banks monitor the customer’s KYC status regularly. 

PPF Deposit Rules for NRI

• NRI can invest in PPF only if the account was opened while they were a resident.
• New investments or accounts are not permitted under the new NRI PPF account rules.
• Contributions must be on a non-repatriation basis.
• You can invest up to ₹1.5 lakh annually until the 15-year maturity but cannot reopen or extend after that.

PPF Extension Rules for NRI

Resident Indians can extend their PPF accounts in 5-year blocks after maturity. However, NRIs cannot extend their accounts once the initial 15-year period is over.

Here’s an exception:

• If you extended your PPF as a resident and became NRI during the extension, you can continue until the new maturity.
• After that, no further extension is allowed.

For instance, an Indian resident investing in PPF extends its account for five years. Let’s assume the residential status remains the same during the first two years. However, at the end of two years, the person decides to move abroad, and the status changes to NRI. In such a case, the person can continue to hold the PPF for the remaining three years of the five years. This extended period is valid until maturity. The NRI PPF account cannot be extended beyond this period. 

Maturity of NRIs PPF Account 

There are two types of withdrawals from the PPF account. One is complete withdrawal on maturity, and the other is partial withdrawal. NRI needs to understand the terms for both these withdrawals:

Premature Withdrawal

Special rules apply to non-resident Indians for premature withdrawals. They can withdraw starting from the seventh year onwards, from the account’s opening date. However, there are certain conditions relating to it, as mentioned below:

• Life-threatening ailment of the account holder
• A severe disease of the account holder
• Higher education of children

In case of premature withdrawal, a penalty is levied on the interest from the period in which the account has been held. The penalty is a 1% reduction from the interest rate applicable for that period. Moreover, NRIs can also take out loans against PPF from the third year onwards. 

On Maturity

On maturity, the amount can be completely withdrawn. It cannot be left in the account as it will not earn interest. NRIs must withdraw the PPF amount entirely upon maturity. 

Both partial and complete withdrawals are credited to the NRO account. Partial withdrawals cannot be repatriated, but the maturity amount can be repatriated abroad. 

PPF Account Taxation for NRIs

PPF returns are tax-free in India. However, once the PPF matures and the amount is credited to your NRO account, it becomes subject to NRO taxation rules.

So while an NRI can open a PPF account (if it was opened before becoming an NRI), the final proceeds might still attract taxes when withdrawn and credited.

Final Thoughts 

To sum it up, PPF for NRI is not a “start fresh” option, it’s a “continue what you started” plan. If you already had a PPF account before becoming an NRI, you can still enjoy its benefits until maturity, but with some limitations. 

Understanding these PPF NRI rules will help you plan better, stay compliant, and avoid losing out on interest or tax benefits.

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