The Indian government recently announced that Public Provident Fund (PPF) accounts had to be closed when a person became a Non Resident Indian (NRI).
A few months ago in October, the government announced that if a resident, who opened an account under this scheme, and subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident.
On February 23, 2018, the government’s Department of Economic Affairs (DEA) released an office memo keeping its earlier notification in abeyance (or temporarily dismissed). The earlier notification was regarding the NRI’s PPF account released on October 2, 2017. According to the recent memo
Subject: Public Provident Fund (PPF) accounts held by Non Resident-regarding.
The undersigned is directed to refer to this Department’s notification GSR No.
1237(E) dated 03.10.2017 regarding amendment in PPF Scheme, 1968. As per the said
notification, if a resident who opened an account under this scheme, subsequently
becomes a non-resident during the currency of the maturity period, the account shall be
deemed to be closed with effect from the day he becomes a non-resident.
2. It has now been decided to keep the said notification in abeyance till the further
order in this regard.
An article in Business line highlights how “With RERA kicking in, NRI interest in Indian realty set to rise”
Implementation of Real Estate (Regulation and Development) Act, 2016 will boost the Non-Resident Indian sentiments on Indian real estate sector, say market experts.
With more transparency coming in the realty sector, there is bound to be an increase in the number of NRIs planning to buy property back home, they said..
The Indian real estate sector, in recent times, has witnessed a lot of changes, more so after the introduction of the Real Estate (Regulation and Development) Act, 2016 and the Goods and Services Tax (GST).
“As RERA will ensure timely delivery of projects and also since all the information will be available online, it will boost the confidence of NRIs who are thinking of investing in the Indian real estate market. But, the GST might have a negative impact on the buyers as there might be increase in the price of the properties,” said Parveen Jain, Vice-Chairman, NAREDCO (National Real Estate Development Council).
Right now, prospective home-buyers have to pay a 12 per cent GST to developers if they are planning to buy a property which is under construction. However, there is no GST on the fully constructed property.
Also check out our recent articles on investing in India:
Non Resident Indians are continually looking for investment opportunities in India. A few weeks ago, we blogged about “NRIs for real estate investment in India – Know the simple Rules” The Government of Indian recently announced new rules under which select small savings schemes like Public Provident Fund (PPF) and National Saving Certificates (NSC) will not earn you the same rate if you become non-resident Indians (NRI).
A summary of changes to rules and what it means to NRIs:
- NRIs will no longer be permitted invest in small savings schemes like NSC and PPF. In the past they were allowed to retain their PPF account if they had opened it before becoming an NRI.
- PPF and NSC currently fetch an interest rate higher than bank savings rates. Some of it is subsidized by the Government of India. (Current rate of PPF is 7.8 per cent while Post Office savings account get 4 %)
- PPF accounts would be deemed to be closed prior to maturity in case the holder becomes a non-resident Indian (NRI). The investor will be then paid interest at the rate applicable to Post Office savings accounts till the date the PPF account is closed.
The Indian government notification on PPF dated October 3 states,
“Provided that if a resident who opened an account under this scheme, subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes a non-resident and interest with effect from that date shall be paid at the rate applicable to the Post Office Saving Account up to the last day of the month preceding the month in which the account is actually closed.”
The finance ministry notification adds:
“Provided that if a resident Indian having purchased a certificate, subsequently becomes Non-Resident during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he becomes a non-Resident, and interest shall be paid at the rate applicable to the Post Office Savings Account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed.”
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