In a new amendment to the post office saving schemes such as Public Provident Fund (PPF) and National Saving Certificates (NSC), the accounts of members who gained non-resident Indian (NRIs) status will be closed prior to the maturity period. The deposits in such accounts will also suffer an interest cut of nearly half of what they actually earn, notifies the government.
As per the new rules under the Public Provident Fund (PPF) Act 1968, if any Indian resident having a PPF account becomes a non-resident Indian during the course of maturity period, his/her account should be considered to be closed effective from the day he/she becomes NRI.
The interest paid on such deposits is also reduced to 4%, which will become effective from the day the member becomes NRI until the day of the month preceding the month in which the account is actually closed.
In case of National Saving Certificates (NSC), the certificate should be considered as encashed on the day the member gains the NRI status. Interest on such certificates will be paid as per the applicable post office savings account interest rate from time to time, effective from the day the member becomes an NRI till the last day of the month before the actual month in which the certificate is encashed.
For the October-December quarter, the NSC and PPF accounts attract an interest of 7.8% per annum. The interest rates of small savings schemes, which are revised on a quarterly basis, are kept unchanged since April 2016.
The new rules also specify that NRIs are not eligible to open new PPF accounts in India besides contributing to their existing accounts which they opened during their resident status in the country.
The Indian Income Tax Act requires residents of India to live in the country for at least 182 days in a financial year or 365 days spread out over four consecutive years to become an Indian citizen. Not staying in the country for the specified period makes the person non-resident.
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