A New Rule for PPF, NSC for NRIs- Here’s What You Need to Know

Public Provident Fund (PPF) and National Savings Scheme (NSC) are two of the most popular small savings schemes in India. They are easy to invest into, offer high returns, and also provide tax benefits as they are covered under the Section 80C of Income Tax Act.

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PPF and NSC are only available for Indians, so NRI’s (Non-Resident Indians) can’t invest in these.
However, earlier the government allowed an individual to retain these investments if they became an NRI after investing in these schemes. The government has now taken away this benefit. So, if a person who has invested in PPF or NSC attains the status of NRI mid-way before these have matured, they have to close their account(s). This comes in as per the 2017 Amendment Rule. Let’s take a closer look at what it says.

What Does the Notification Say?

According to the notification, NRIs cannot enjoy the benefits of their PPF investment as the account will be closed as soon as the individual’s status changes from “resident Indian” to NRI.
The same notification addresses NSC scheme as well. It says that if an Indian resident who bought an NSC certificate becomes an NRI during the maturity period, the certificate will be encashed on the day of the “status-change”.
However, in case of both NSC and PPF, the investor will continue to earn interest at the rate applicable to the Post Office Saving Account, until the account is closed (in the case of PPF), or the certificate is encashed (in the case of NSC).