Public Provident Fund (PPF) and National Savings Scheme (NSC) have been the most popular and attractive investment tools for many Indians, as they are safe and fall under Section 80C. As per the new rules, these select small savings scheme investments like NSC and PPF for Non-Resident Indians (NRIs), the accounts have to be closed before the maturity date if the person holding the account has got his or her status changed from resident to non-resident Indians.
Both PPF and NSC schemes are only for Indian residents and NRIs cannot make investments in these instruments. However, earlier, NRIs were allowed to retain their accounts if they opened the account before becoming an NRI.
Here are the changes or amendments made to the PPF or NSC rules for NRIs.
PPF for NRIs:
According to the new notification, “if a resident who opened an account under this scheme, subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident…”
This new amendment rule means NRIs are not eligible for availing the PPF benefits till maturity and the account will be closed once he turns into NRI from resident Indian.
NSC for NRIs:
Aper the new notification, “Provided that if a resident who purchased the certificate, subsequently becomes a non-resident during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he becomes a non-resident…”
This amendment as well says that NRIs will not be able to avail the NSC benefits till maturity if his status changes from Resident Indian to NRI.
In addition, the notification says that NSC and PPF for NRIs, “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/encashed.”