The government has implemented some changes regarding the Public Provident Fund (PPF) and National Savings Certificate (NSC).
If the holder’s status changes from resident Indian to non-resident Indian (NRI), the PPF account will have to be closed and the NSC encashed. It will be deemed to be closed with effect from the day he becomes non-resident.
The interest earned up to the date of the closure of the account would be paid. Current rate of interest on PPF and NSC is 7.8% per annum.
But interest with effect from that date of becoming an NRI shall be paid at the rate applicable to the Post Office Saving Account (4% per annum) up to the last day of the month preceding the month in which the account is actually closed or encashed.
However, as a report in Economic Times pointed out, the residency definition differs under the Income Tax Act and Foreign Exchange Management Act and clarification is still awaited on that issue.
The above information has been taken from various news websites.
