Hi,
Can anyone please advise what would be the tax treatment in case of PPF investment already made by a NRI (while employed in India during the P.Y) but later on moves abroad for work and satisfies the condition of more than 182 days out of India?
Can we claim deduction of PPF in such return?
A resident-turned-NRI is allowed to invest in the account from your non-resident ordinary (NRO) or non-resident external (NRE) account.
Earlier NRIs were not allowed to make contributions into PPF accounts opened before they became NRIs. NRIs cannot open a PPF account. However, in 2003, a notification was issued permitting NRIs to continue investing in existing PPF accounts till maturity.
At maturity you would have the option to remit the proceeds in your country of residence. You do not have the option of extension post your mandatory 15 years’ lock-in period. In case, post maturity you leave the account unattended, it will be considered as “extended without contribution”.
While interest earned on PPF is exempt in India, the tax treatment for you would be based on your country of residence and will be taxable accordingly.
Hi Matthew,
Thank you for your reply!
However in case the investment was made from the normal bank account before travelling abroad (since it was before becoming NRI), in that case can we still claim deduction of investment u/s 80C?
Also your reply above does not clearly indicate whether we get deduction if we invest from NRE or NRO account (though it says we are allowed to invest from such account).
Hi Tejas,
Hope the below will clarify your queries:
(1) Yes, you can claim deduction u/s. 80C for the amount invested from the normal bank account when you are resident;
(2) If you have anyother taxable income in India, you can claim deduction updto Rs.150,000/- u/s.80C.
Regards,
DM
CAclubindia
