Government amends PPF rules, accounts will be closed down if holders become NRIs
A notification on National Savings Certificates said they will be encashed in case of a similar change in the person’s status.
The government has amended rules on small savings schemes such as National Savings Certificates and Public Provident Fund. Now, such accounts will be closed before they mature if the account holders become non-resident Indians, IANS reported.
The new rules – according to which, the interest payable will be up to the date of the account closure – were notified in the official gazette earlier this month, PTI reported.
The notification said that in case of a similar change of status of the certificate holder, “the certificate will be encashed, or deemed to be encashed, on the day he becomes non-resident”.
NRIs are also not allowed to invest in other instruments such as Monthly Income Schemes and other time-bound deposits offered by post offices.
Last month, the government did not change the 7.7% interest rates on small savings schemes – that are recalibrated every quarter – for the October-December period.
According to the new rules issued by the government, PPF and NSC will be now closed on the day the investor becomes a non-resident.
Indian residents having investments in saving schemes like public provident fund (PPF) or national savings certificates (NSC) will not get high returns if they become non-residents Indians (NRIs).
According to the new rules issued by the government, PPF and NSC will be now closed on the day the investor becomes a non-resident. Besides, the interest would also be paid at the post office savings account rate, which would be quite lower.
At present, both the PPF and NSC schemes 7.8% annual return, much more higher than the banks.
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"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," the notification said.
It further added that the "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".
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