My daughter settled in the UK after her marriage in 2021 and is a British passport holder. She opened her PPF a/c in 2008 when she was in service in India till 2021. She also has a savings bank account with her mother. She does not have any source of income in India at the moment. Can I deposit Rs. 1.5 lakh every year in her PPF account till maturity just to keep it alive, or it should/can be closed before the initial maturity period of 15 years. Please note that I have a PPF account in which I deposit Rs. 1.5 lah every year and file my own ITR as Sr. citizen.
As per the Public Provident Fund Scheme 2019 read with the Government Savings Promotion General Rules, 2018, a non-resident for FEMA purposes cannot open a PPF account. However, the non-resident can continue to contribute to the PPF account, which was opened when he/she was a resident, even after one becomes a non-resident. The PPF account cannot be extended beyond the initial 15 years or beyond the extended block if it has already been extended.
The money in the PPF account is non-repatriable abroad; thus, the maturity proceeds can only be deposited in the NRO account, not the NRE account. However, a non-resident can remit up to $1 million from his/her NRO account every year after paying applicable taxes regarding the money being remitted.
Since you are already depositing ₹1.50 lakh in your own PPF account and thus availing full tax benefit under Section 80 C , you need not deposit another 1.50 lakh in her account as it will not result in any additional tax benefit. To keep this account alive for 15 years, you just need to deposit ₹500 every year. Moreover, per the PPF rules, a person cannot deposit more than 1.50 lakhs in his own PPF account and the PPF account of all his children.
So if you want to deposit Rs. 1.50 lakh I would advise you to gift this money to her and let her contribute Rs. 1.50 lakh from her bank account. Since she has become a non-resident under FEMA, she should intimate the change of her status to the bank, and the bank will designate the account as an NRO account.
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Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant his X handle.
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