PPF maturity when moving abroad

The Public Provident Fund is one of the most popular investment instruments in India because of the guaranteed tax free returns it provides. It does offer a good return on invested amount too. Currently it offers 7.1% rate of interest which is higher than the rates provided by other fixed income generating options. At the end of its tenure, the maturity amount is tax free. PPF is chosen as a security for retirement by majority. There could be other benefits received from this scheme in case of an emergency need for funds. 

Residents enjoy all the benefits while there a few who leave the country and receive the amount from the PPF account at the end of the maturity. Those who leave India and settle elsewhere might have this question-What will happen to their PPF account at the time of maturity? 

Here is a stepwise analysis of the relevant provisions affecting the PPF maturity proceeds:

1. NRIs are not allowed to invest in PPF. 
2. If a PPF account was opened by an NRI before becoming an NRI, then he/she can continue it until maturity. If you are moving abroad you can continue your PPF until maturity. 
3. The applicability of tax provisions for the investments shall be the same irrespective of whether you are a resident or a non-resident. 
4. The maturity proceeds of PPF account will continue to be fully tax free. 
5. The subscriber is not allowed to extend the tenure of PPF account beyond its original term of 15 years. If the same was already been extended by the subscriber while he/she were in India, extension beyond the period of five years is not possible.
6. The subscriber can invest in his existing PPF account even after becoming NRI through his NRE or NRO account. They are allowed to only contribute till their PPF account matures.

How withdrawal should be made by an NRI from PPF account?

• Fill in the PPF withdrawal request form from the bank’s website where you have your PPF account. If you can’t find it, then just type a simple letter addressing the bank that you want to withdraw the entire amount from your PPF account.
• Mention the following details: PPF account number, date of initial subscription, and the account number and IFSC of the bank account where you want the proceeds to go pertaining to your NRO account.
• Send via Post or courier the signed PPF withdrawal request to your relatives, parents, or siblings in the city where you have the NRE/NRO account. Along with this send an authority letter mentioning that you are allowing the person to process the withdrawal on your behalf. Also send your identity/address details and statements of your NRO account and PPF account.
• The person authorized on your behalf has to go to the bank where you have the NRE/NRO account. They have to attest these documents. Then the person has to visit the PSU bank for PPF withdrawal. The bank will accept the documents which are attested by your bank.

Image: https://unsplash.com/@notaphotographer

Finvestor Social Media

Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

See Full Bio