Here’s what the rules say about PPF accounts for NRIs and what parents can do if their children have moved overseas.
Can NRIs hold a PPF account?
Under current rules, NRIs cannot open a new PPF account after their residential status changes. However, if the account was opened while the person was still a resident Indian, it can continue until its original 15-year term ends.
To keep the account active, a minimum deposit of ₹500 per financial year is required. NRIs can continue contributing to their existing PPF account during this period, but cannot extend the tenure beyond 15 years.
How are the proceeds handled?
When the account matures, the accumulated amount must be credited to the individual’s NRO (Non-Resident Ordinary) account. The PPF balance is non-repatriable, which means it cannot be directly transferred abroad.
However, funds in an NRO account can be remitted overseas up to USD 1 million (around ₹8.3 crore) per financial year, after paying applicable taxes.
Tax benefits and deposit limits
Contributions to PPF are eligible for deductions under Section 80C of the Income Tax Act, up to a limit of ₹1.5 lakh per financial year.
If a parent already invests ₹1.5 lakh in their own PPF account, depositing more in a child’s account won’t offer additional tax benefits. The overall investment cap of ₹1.5 lakh applies collectively across self and minor accounts.
Experts suggest that if parents want to contribute, they should transfer the amount as a gift to the child’s bank account first, so the investment is made from the child’s account.
Bank account update required
Once an individual becomes an NRI, they must inform their bank about the change in residential status. The bank will then convert the existing savings account into an NRO account, as required by the Reserve Bank of India (RBI).
