Q. My daughter is settled in the UK after her marriage in 2021 and is a British passport holder. She had opened her PPF (Public Provident Fund) a/c in 2016 when she was in India. She also has savings bank accounts jointly with her mother. She does not have any source of income in India now. Can I deposit ₹1.5 lakh every year in her PPF account till maturity just to keep it alive, or should it be closed before the maturity period of 15 years? Though I have my own PPF account also, where I deposit ₹1.5 lakh every year. I filed my own ITR as a senior citizen. Can she continue her SB account as the 1st holder, or does she have to change her status in the savings bank account?
Your daughter had become a non-resident under FEMA (Foreign Exchange Management Act) the day when she left India after her marriage. As per the PPF rules, a non-resident under FEMA cannot open a PPF (Public Provident Fund) account. However, he can continue to contribute to the PPF account which was opened when he/she was a resident even after becoming a non-resident. In such cases the PPF account cannot be extended beyond the initial period of 15 years.
Repatriation rules and PPF maturity proceeds
The money in a PPF account is non-repatriable, and thus the maturity proceeds can only be deposited in an NRO (Non-Resident Ordinary) account and not the NRE (Non-Resident External) account. Please note that a non-resident can remit up to 10 lakh US dollars from his NRO account every year after paying taxes in respect of the money being remitted, if any tax is payable here in India.
No additional 80C benefit for contributions beyond ₹1.5 Lakh
Since you already are depositing Rs. 1.50 lakhs in your own account and thus availing full tax benefit under Section 80C, you need not deposit another Rs. 1.50 lakhs 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 Rs. 500 every year.
Aggregate contribution limit across family PPF accounts
Moreover, as per the PPF rules, a person cannot deposit more than 1.50 lakhs in his account and his children’s PPF account taken together. So if you want to deposit ₹1.50 lakhs, I would advise you to give this money to her and then contribute ₹1.50 lakhs from her bank account.
Since she has become a non-resident under FEMA, she should change her status to the bank, and the bank will then re-designate the existing savings bank account as an NRO account.
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Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on his X handle.
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