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Home >Money >Personal Finance >What happens to PPF and EPF when you become an NRI?

NEW DELHI: Non-resident Indians (NRIs) were not allowed to open public provident fund (PPF). Since December 2019, they were also disallowed from contributing to an existing PPF account they had opened while they were Indian residents.

Let’s look at the difference between the old and the new rules that came into existence in 2019 for PPF.

OLD RULES

Once Indian citizens become NRIs, they were not allowed to open a new PPF account. However, if they had one while they were residents, they could make contributions to that. On maturity, after 15 years, they could withdraw the money like a resident.

The government had issued a notification in October 2017, amending the provision of the PPF scheme. It said residents who opened a PPF account and subsequently became NRIs, their account shall be deemed to be closed from the date of change of residential status - from resident to non-resident. However, the government kept it in abeyance.

NEW RULES

In December 2019, the government notified the Public Provident Fund (PPF) Scheme, 2019, replacing 1968 Scheme.

Under this new scheme, NRIs are not allowed to make fresh deposits to their PPF account. However, they can continue to hold the pre-existing accounts (opened when they were residents) until maturity. The tax laws remain the same – the proceeds are tax-free in India.

Even though proceeds are tax-free in India, NRIs will need to check how they would be taxed in their respective countries.

Note that Reserve Bank of India’s regulations require NRIs to convert all their resident savings and deposit accounts to non-resident accounts (non-resident external or non-resident ordinary) upon their departure from India when they plan to settle abroad.

Existing EPF account

If you are NRI and have an existing Employee Provident Fund 9EPF) account, you will continue to earn interest on it until you are 58. If you have completed five years of service, you can withdraw the balance after being out of employment for 60 days, even if you have not attained the age of 58.

(Do you have personal finance queries? Send them to mintmoney@livemint.com and get them answered by industry experts)

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