According to the new rules issued by the Indian Government on small savings schemes, there will be a change of the difference in interest rates between an Indian and an NRI. As a result, a person will no longer be able to earn the same rate of interest on PPF and NSC account if he or she becomes an NRI. An investor account will be closed on the same date he becomes an NRI.
This new amendment was issued for the Public Provident Fund Act 1968. The amendment states that if any Indian resident who is an existing account holder under the Act, will no longer be able to continue his account if he becomes an NRI during maturity period.
The amendment also states that interest will be paid at a rate of 4% per annum as per the savings account at a post office. As per NSC, it will be considered that the money is encased on the day an investor becomes an NRI.
As per the amendment is concerned, the Indian government has not modified any rate of change of interest on PPF and NSC account. The rate of interest will be 7.8% annually for the latest quarter of October to December. This rate is basically announced on a quarterly basis since April of 2016.
As per the government policy and Income Tax Act, a person is considered as an Indian citizen if he lives here for 60 days or 182 days in a year and 365 days in each of next upcoming four years. If this criterion doesn’t satisfy for a person then he will be declared as an NRI person in India.
As per the latest rules and regulation, an NRI will no longer be able to open a PPF account, but at the same time, he will be allowed to contribute to his existing account which he had opened before becoming an NRI.
