Do you have to close your PPF account if you are shifting abroad? Rules explained

New Delhi: Non Resident Indians (NRIs) cannot open a new Public Provident Fund (PPF) account. However if a person opens a PPF account while living in India and later becomes an NRI, they can continue contributing to the account until it matures. The account must be maintained on a non repatriation basis, meaning the funds cannot be freely transferred abroad.

As per the rules, NRIs cannot extend or continue their PPF account after it matures. The account must be closed upon maturity. Any money deposited after maturity is considered an irregular deposit and will not earn any interest. The amount deposited after maturity will be refunded to the account holder without interest.

PPF deposit and interest
If the account holder does not deposit the minimum amount of Rs 500 in a financial year then the PPF account becomes discontinued. The account can be reactivated before its maturity by depositing Rs 500 as the minimum contribution plus a penalty of Rs 50 for each year in which the minimum deposit was not made.

The PPF offers an interest rate of 7.1 percent per year which is compounded annually. The minimum amount that must be deposited in a financial year is Rs 500 while the maximum amount allowed is Rs 1.5 lakh. The money can be deposited either as a single lump sum or in multiple installments throughout the year.

PPF maturity extension for NRIs vs Indian residents
A PPF account matures after 15 years. After maturity, the account holders can withdraw the entire amount, extend the account without making new deposits or extend it with new deposits by submitting Form H within one year.

If the account holder does not choose any option, the account continues for 5 years without additional deposits and the existing balance continues to earn interest. In this case, withdrawals are allowed only once per year.

If the account is extended with new deposits, the account holder can deposit up to Rs 1.5 lakh per year and withdraw up to 60 percent of the eligible balance, as per the applicable rules. Tax benefits also continue to apply. The money in the account continues to earn interest under the PPF scheme.

NRIs cannot extend their PPF accounts after the initial 15-year maturity period. Unlike resident Indians who extend their accounts in blocks of 5 years, NRIs are not allowed to do so. Once the account matures, it cannot be extended under the PPF scheme.

Only 1 PPF account
As per the PPF rules, a person can open only one PPF account in their name. This rule applies to all banks and post offices. If a person opens more than one PPF account, the additional accounts will be closed and the money deposited in those accounts will be refunded without any interest.