PPF & Sukanya Samriddhi Yojana for NRIs — Rules, Restrictions & What to Do in 2026

By CA Mayank Wadhera (CA|CS|CMA|IBBI Registered Valuer), MKW Advisors | Legal Suvidha | DigiComply

Last updated: March 2026 | Applicable for FY 2025-26 (AY 2026-27)

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You moved abroad. You accepted a job in Dubai, Singapore, the US, or the UK. The excitement of a new country, a higher salary, and global exposure consumed the first few months. Then tax season arrived and someone asked: "What about your PPF account? What about the Sukanya Samriddhi you opened for your daughter?"

If you are reading this, you are likely in that exact situation right now.

The Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are two of India's most beloved savings schemes. They offer guaranteed returns, sovereign safety, and exceptional tax benefits. But the moment your residential status changes from Resident to Non-Resident Indian (NRI) under FEMA, the rules change dramatically -- and most NRIs either do not know this or discover it too late.

This is the definitive, no-fluff guide. We will cover every rule, every restriction, every practical step, and every mistake to avoid. By the end of this article, you will know exactly what to do with your PPF and SSY accounts as an NRI in FY 2025-26.

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Part 1: Public Provident Fund (PPF) — The Complete NRI Rulebook

Can an NRI Open a New PPF Account?

No. Absolutely not.

The Ministry of Finance notification dated October 3, 2017 made this crystal clear. An NRI cannot open a new PPF account in India. This applies regardless of whether you hold an Indian passport, have an NRO account, or have family members who are residents.

The relevant notification amended the PPF Scheme, 2019 (originally 1968) to explicitly state that only a resident individual can open a PPF account. If you became an NRI after 2017 and somehow opened a PPF account (some banks and post offices were not updated), that account is technically irregular and may face complications at maturity.

Key point: NRI status is determined under FEMA (Foreign Exchange Management Act), not the Income Tax Act. You become an NRI under FEMA the moment you go abroad for employment, business, or with the intention to stay outside India for an uncertain period. This is different from the 182-day rule used for income tax purposes.

What Happens to Your Existing PPF Account?

This is where it gets nuanced. If you opened a PPF account while you were a resident and subsequently became an NRI, the account does not automatically close. Here is how it works:

The account continues until maturity (15 years from the date of opening). You can continue to hold it, and in most cases, you can continue making deposits until the account matures.

However, there are critical restrictions:

1. No extension beyond 15 years. Resident PPF holders can extend their accounts in blocks of 5 years indefinitely. NRIs cannot. Once the 15-year lock-in period ends, the account must be closed.

2. Deposits during the remaining tenure. Technically, the scheme allows you to deposit up to Rs. 1,50,000 per financial year until maturity. In practice, however, some banks and post offices have started refusing deposits from NRIs or from accounts linked to NRO accounts. This varies by branch and institution. SBI and certain nationalized banks tend to be more accommodating, while post offices are stricter.

3. Interest continues to accrue. Even if you stop making deposits, the account earns interest on the existing balance until maturity at the applicable rate.

4. If you do not inform the bank. Many NRIs simply do not inform their bank or post office about their change in residential status. The account continues to function as if held by a resident. While this is technically non-compliant, enforcement has been inconsistent. That said, at the time of maturity or premature closure, the bank may ask for KYC updates, and your NRI status could surface, leading to complications.

PPF Interest Rate and Returns

The PPF interest rate for Q4 FY 2025-26 (January to March 2026) stands at 7.1% per annum, compounded annually. The rate is reviewed quarterly by the government and has remained at 7.1% since Q1 FY 2020-21.

For a PPF account with the maximum annual contribution of Rs. 1,50,000 over 15 years:

• Total deposits: Rs. 22,50,000
• Interest earned: Approximately Rs. 18,18,000
• Maturity value: Approximately Rs. 40,68,000

This is a guaranteed, sovereign-backed return -- making it one of the safest instruments available. For NRIs, the question is not whether PPF is a good instrument (it is), but whether you can actually access it and whether the tax treatment works in your favor.

Lock-in Period and Partial Withdrawal Rules

PPF has a 15-year lock-in period from the end of the financial year in which the first deposit was made.

Partial withdrawals are permitted from the 7th financial year onward. The maximum withdrawal allowed is the lower of:

• 50% of the balance at the end of the 4th preceding financial year, or
• 50% of the balance at the end of the immediately preceding financial year

NRIs holding existing PPF accounts are generally allowed to make partial withdrawals, but again, this depends on the bank's awareness of your NRI status and their internal policies.

Loan against PPF is available between the 3rd and 6th financial years. However, this facility is practically unavailable for NRIs since most banks will not process loans against PPF for non-resident account holders.

Tax Treatment of PPF for NRIs — The Debate

PPF enjoys EEE (Exempt-Exempt-Exempt) status under Indian tax law:

• Contributions qualify for deduction under Section 80C (up to Rs. 1,50,000 per year) -- but only under the old tax regime
• Interest earned is exempt under Section 10(11) of the Income Tax Act
• Maturity proceeds are fully tax-free

For NRIs, the key questions are:

1. Can NRIs claim Section 80C deduction? Yes, if you are filing a return in India and have opted for the old tax regime, you can claim the Section 80C deduction on PPF contributions. However, most NRIs with only investment income in India find the new tax regime (no deductions but lower rates) more beneficial. Evaluate both options before deciding.

2. Is PPF interest really tax-free for NRIs? Section 10(11) exempts PPF interest from income tax. The section does not distinguish between residents and non-residents. Therefore, on a plain reading, PPF interest remains exempt for NRIs as well. However, there is a school of thought that since NRIs are not supposed to hold PPF accounts (post-2017), the exemption may be questioned. In practice, we have not seen the Income Tax Department deny this exemption, but it is a grey area. Get professional advice from a qualified CA before relying on this exemption in your specific case.

3. What about taxation in your country of residence? This is where most NRIs get tripped up. Even if PPF interest is exempt in India, it may be fully taxable in your country of residence. For example:

• USA: PPF interest is taxable as ordinary income. The US does not recognize PPF as a retirement account. You must report the interest on your US tax return.
• UK: PPF interest is taxable under UK self-assessment.
• UAE/Dubai: No personal income tax, so PPF interest remains effectively tax-free.
• Singapore: Generally not taxed if the income is not remitted to Singapore (depends on the source).

The India-US DTAA (Double Taxation Avoidance Agreement) does not provide specific relief for PPF interest. Always consider the total global tax impact, not just the Indian tax position.

What to Do at PPF Maturity

When your PPF account matures as an NRI:

1. Visit the bank/post office (or authorize someone via Power of Attorney) to close the account.
2. Submit Form C (PPF account closure form) along with your passport, NRI status proof, and NRO account details.
3. Maturity proceeds will be credited to your NRO account. They cannot be credited to an NRE account directly.
4. Repatriation: Funds in your NRO account can be repatriated abroad (up to USD 1 million per financial year under the LRS/RBI guidelines) after paying applicable taxes, if any. Since PPF maturity is tax-free, no TDS should apply, but ensure you have proper documentation.

Pro tip: If your PPF is with a post office and you have moved abroad, the closure process can be cumbersome. Consider transferring the PPF to a bank (SBI, Bank of India, or any other authorized bank) before your departure or during a visit to India. Bank processes tend to be smoother and can sometimes be managed partially online.

PPF vs NRE Fixed Deposit — A Comparison for NRIs

This is one of the most common comparisons NRIs make. Here is a head-to-head breakdown:

Verdict for NRIs: NRE FDs are almost always more practical for NRIs. They offer comparable returns, full repatriability, tax-free status in India, and much higher liquidity. PPF makes sense only if you already have a mature account with a significant balance and the tax-free status benefits your global tax position.

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Part 2: Sukanya Samriddhi Yojana (SSY) — The NRI Minefield

Can an NRI Open a New SSY Account?

No.

Sukanya Samriddhi Yojana is available only to a resident parent or legal guardian for a girl child below 10 years of age. NRIs cannot open a new SSY account.

What Happens to an Existing SSY Account When You Become NRI?

This is where the 2024 amendment changed everything, and most NRIs are still unaware.

Prior to 2024: There was ambiguity. Many NRIs continued operating SSY accounts without any issues. Banks and post offices did not actively check residential status for SSY accounts.

After the 2024 Amendment: The Sukanya Samriddhi Account Scheme was amended to explicitly state that if the account holder (the girl child) or the parent/guardian operating the account becomes a non-resident or a citizen of another country, the SSY account must be closed within six months of the change in residential status or citizenship.

This is not optional. It is a mandatory closure requirement.

The Six-Month Deadline — What You Need to Know

Let us break this down with practical scenarios:

Scenario 1: You (the parent) moved abroad in October 2025. You became an NRI under FEMA. You have until April 2026 to close your daughter's SSY account. If you miss this deadline, the account may be treated as irregular, and you could face penalties.

Scenario 2: Your daughter turned 18 and moved abroad for studies in August 2025. If she qualifies as an NRI under FEMA (which is likely if she went for a full-time degree program), the account must be closed by February 2026.

Scenario 3: You moved abroad in 2020 but never closed the SSY. You are technically in violation of the rules since the 2024 amendment. While the government has not launched a crackdown, the account is irregular. Close it at the earliest opportunity.

SSY Interest Rate and Returns

The SSY interest rate for Q4 FY 2025-26 is 8.2% per annum, making it one of the highest-yielding government-backed instruments. The rate is reviewed quarterly.

SSY has a maximum tenure of 21 years from the date of opening or until the girl child gets married after turning 18 (whichever is earlier). Deposits can be made for the first 15 years, and the account earns interest for the remaining period without any deposits.

The tax treatment is EEE -- contributions qualify under Section 80C (old regime), interest is exempt, and maturity is tax-free.

How to Close an SSY Account as an NRI

Follow these steps:

1. Gather documents: Passport (showing foreign residency), visa, the girl child's birth certificate, SSY passbook, KYC documents, and NRO account details.
2. Visit the bank/post office where the account is held (or authorize via Power of Attorney).
3. Submit the premature closure form along with a declaration stating change in residential status.
4. Interest on premature closure: When SSY is closed prematurely due to NRI status, the account holder typically receives the accumulated balance with interest. However, a penalty may apply -- the interest rate may be reduced to the Post Office Savings Account rate (currently 4%) for the period after the date of becoming NRI. This varies and has not been uniformly applied. Negotiate with the branch manager and seek professional help.
5. Proceeds will be credited to the NRO account (or the girl child's savings account if she is a resident minor with an Indian bank account).

Penalty for Not Closing SSY on Time

While the amendment mandates closure within 6 months, the exact penalty framework is not fully detailed. In practice, the consequences can include:

• Reduced interest rate: The account may earn only the Post Office Savings Account rate (4%) instead of 8.2% for the period after becoming NRI.
• Account freezing: The bank or post office may freeze the account upon discovering the NRI status, preventing withdrawals until regularization.
• Compliance issues: When you eventually return to India or try to close the account, the irregular status could cause delays and additional documentation requirements.

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Part 3: Other Small Savings Schemes and NRI Restrictions

PPF and SSY are not the only government schemes affected by NRI status. Here is a quick reference for other popular small savings instruments:

National Savings Certificate (NSC)

• Can NRIs buy new NSC? No. Only resident Indians can purchase NSC.
• Existing NSC: Continues until maturity. Interest is taxable in India (not exempt like PPF).
• At maturity: Proceeds credited to NRO account.

Kisan Vikas Patra (KVP)

• Can NRIs buy new KVP? No. Restricted to resident Indians.
• Existing KVP: Continues until maturity.
• At maturity: Proceeds credited to NRO account.

Senior Citizens Savings Scheme (SCSS)

• Can NRIs invest in SCSS? No. SCSS is available only to resident senior citizens (60+) or those who took voluntary retirement (55+).
• Exception: If you return to India and re-establish residency, you can open SCSS. This is relevant for NRIs planning to retire in India.
• Existing SCSS: If you had an SCSS account as a resident and then became NRI, the account should be closed. Interest is taxable.

Post Office Monthly Income Scheme (POMIS)

• Can NRIs open POMIS? No.
• Existing POMIS: Continues until maturity with interest payable monthly.

The pattern is clear: India's small savings schemes are designed for residents. NRIs are systematically excluded from new investments. Existing investments are generally grandfathered but with restrictions.

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Part 4: Practical Action Plan — What to Do When You Become an NRI

Step 1: Audit All Your Small Savings Investments (Within 30 Days of Moving Abroad)

Make a list of every PPF, SSY, NSC, KVP, SCSS, or POMIS account you hold. Note the date of opening, current balance, maturity date, and the institution where the account is held.

Step 2: Inform Your Bank/Post Office About Your NRI Status

While many NRIs skip this step (and it is not actively enforced for PPF), it is the legally correct thing to do. For SSY, it is now mandatory per the 2024 amendment.

Step 3: Close SSY Accounts Within 6 Months

If your daughter's SSY account exists and either you or she is now an NRI, initiate closure immediately. Do not wait for the deadline. Transfer proceeds to an NRO account or the daughter's Indian savings account.

Step 4: Decide on PPF — Continue or Close

If your PPF is close to maturity (within 2-3 years), it may make sense to let it run. The guaranteed 7.1% return on the existing balance is attractive.

If your PPF has 10+ years remaining, consider whether the liquidity lock-up is worth it. You cannot extend it, and the money will be stuck in an NRO account at maturity with repatriation limits.

Step 5: Convert Savings Accounts and Link NRO/NRE

Ensure your bank accounts are converted to NRO/NRE as required under FEMA. Link your PPF to your NRO savings account for interest credits and maturity proceeds.

Step 6: Evaluate Your Global Tax Position

Consult a CA who understands both Indian tax law and the tax regime of your country of residence. The "tax-free in India" benefit of PPF may be irrelevant if the interest is fully taxable abroad.

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Part 5: Common Mistakes NRIs Make with PPF and SSY

Mistake 1: Opening a new PPF account after becoming NRI. Some NRIs use their old resident-status KYC or ask family members to open accounts on their behalf. This is illegal and the account can be voided at any time.

Mistake 2: Not informing the bank about NRI status. While enforcement is lax, this creates a compliance risk. At maturity or during any audit, discrepancies can cause account freezes and delays.

Mistake 3: Trying to extend PPF beyond 15 years. NRIs cannot extend PPF in blocks of 5 years. If you try, the bank may reject the request, or worse, accept it and create a compliance problem later.

Mistake 4: Ignoring the SSY 6-month closure deadline. The 2024 amendment is clear. Ignoring it risks reduced interest rates and account irregularity.

Mistake 5: Assuming PPF interest is tax-free globally. PPF interest is exempt in India. It may be fully taxable in the US, UK, Canada, Australia, and most other countries. You must declare it in your country of residence.

Mistake 6: Not converting PPF from post office to bank before leaving India. Post office processes for NRIs are notoriously difficult to handle remotely. Transfer to a bank before you leave.

Mistake 7: Depositing into PPF from an NRE account. PPF contributions should come from an NRO account or Indian income sources. Deposits from NRE accounts can create FEMA compliance issues.

Mistake 8: Confusing FEMA residency with Income Tax residency. You can be a resident for income tax purposes (spent 182+ days in India) but an NRI under FEMA (intent to stay abroad). PPF and SSY rules follow FEMA definitions.

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Part 6: Frequently Asked Questions (FAQs)

FAQ 1: I became an NRI in 2019. My PPF was opened in 2012. Can I still deposit?

Yes, you can deposit until the account matures in 2027 (15 years from opening). However, your bank may or may not accept deposits depending on their internal policy. The minimum annual deposit of Rs. 500 is recommended to keep the account active.

FAQ 2: My PPF matured in 2025. I forgot to close it. What happens?

The account will stop earning interest after maturity if no extension is opted for. Since NRIs cannot extend, the balance sits idle. Contact the bank immediately and close the account. The maturity proceeds remain yours.

FAQ 3: Can I operate my PPF through Power of Attorney while abroad?

Yes. You can authorize a family member or trusted person via a registered Power of Attorney to manage deposits, partial withdrawals, and eventual closure. Ensure the PoA is properly notarized and apostilled if executed abroad.

FAQ 4: Is PPF interest taxable in the US?

Yes. The IRS treats PPF interest as ordinary income. You must report it on your US tax return (Form 1040, Schedule B). The India-US DTAA does not exempt PPF interest from US taxation. You may be able to claim a Foreign Tax Credit if Indian tax was paid, but since PPF interest is tax-free in India, there is no credit to claim.

FAQ 5: My daughter's SSY account was opened in 2018. I moved to the UK in 2023. Do I need to close it?

Yes. Under the 2024 amendment, the SSY must be closed within 6 months of becoming NRI. Since the amendment came after your move, you should close the account at the earliest opportunity. Contact the bank where the SSY is held.

FAQ 6: Can my wife (who is a resident) continue operating the SSY even though I am NRI?

If your wife is a resident Indian and is the guardian operating the SSY account, the account can potentially continue. The 2024 amendment specifically refers to the account holder (girl child) or the operating guardian. If the operating guardian is a resident, there is an argument that the account can continue. However, this is a grey area -- seek professional advice.

FAQ 7: What is the minimum deposit required to keep a PPF account active?

Rs. 500 per financial year. If you fail to deposit the minimum, the account becomes dormant (not closed). It can be revived by paying the minimum deposit plus a Rs. 50 penalty per year of default.

FAQ 8: Can an OCI (Overseas Citizen of India) cardholder open PPF or SSY?

No. OCI cardholders are treated as NRIs for the purpose of PPF and SSY. They cannot open new accounts.

FAQ 9: I returned to India permanently. Can I reopen or restart my PPF?

If you return to India and re-establish resident status under FEMA, you can open a new PPF account. Your old closed account cannot be reopened, but you start fresh with a new 15-year cycle.

FAQ 10: Can I transfer my PPF from one bank to another while being NRI?

Yes, PPF accounts can be transferred between banks and from post offices to banks. This is actually recommended for NRIs as it simplifies management. File a transfer request at the existing institution with details of the new bank and branch.

FAQ 11: Is the PPF balance considered a foreign financial asset for US FBAR/FATCA reporting?

Yes. US-based NRIs must report PPF accounts on FBAR (FinCEN Form 114) if the aggregate value of all foreign financial accounts exceeds USD 10,000 at any time during the year. PPF is also reportable under FATCA (Form 8938) if applicable thresholds are met. Failure to report can result in severe penalties.

FAQ 12: What if I become a resident again before PPF maturity?

If you return to India and re-establish resident status before your PPF matures, you can resume full normal operations -- including extending the account in blocks of 5 years after maturity. The temporary NRI period does not permanently taint the account.

FAQ 13: Can NRIs invest in Atal Pension Yojana (APY) or National Pension System (NPS)?

APY is not available to NRIs. NPS is available to NRIs (both Tier 1 and Tier 2 accounts), making it a viable alternative for retirement planning in India. NPS contributions also qualify for Section 80C and 80CCD deductions.

FAQ 14: My PPF is with the post office and I am abroad. How do I close it?

You will need to either visit India or execute a Power of Attorney. Post offices generally require physical presence for closure. Some Directorate of Postal Services offices accept applications by registered post with attested documents, but this is slow and unreliable. Our strong recommendation is to transfer the PPF to a bank first and then manage closure through the bank.

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Final Thoughts: Be Proactive, Not Reactive

The biggest risk NRIs face with PPF and SSY is not the loss of money -- your money is safe with the Government of India. The biggest risk is compliance risk and lost opportunity cost.

Every year you keep money locked in a PPF earning 7.1% with no repatriation flexibility, you may be missing out on better global investment opportunities. Every month you delay closing an SSY account past the 6-month window, you risk reduced interest and regulatory complications.

The rules are clear even if the enforcement is not. And enforcement tightens over time, not loosens. The 2024 SSY amendment is proof of that.

Do not let government schemes that were designed for residents become compliance headaches for you as an NRI. Audit your portfolio, take action, and consult a professional.

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Need Help Managing Your PPF, SSY, or Tax Compliance as an NRI?

Navigating the intersection of Indian small savings schemes, NRI tax compliance, and global tax obligations is complex. A single misstep can cost you more in penalties and lost interest than the cost of professional advice.

CA Mayank Wadhera and the MKW Advisors team specialize in NRI taxation, FEMA compliance, and cross-border financial planning. We have helped hundreds of NRIs across the US, UK, UAE, Singapore, and Australia manage their Indian investments, file compliant tax returns, and optimize their global tax positions.

Here is what we can do for you:

• Audit your existing PPF, SSY, and small savings accounts for NRI compliance
• File your Indian income tax return with correct treatment of PPF/SSY income
• Coordinate with your bank or post office for account closure or transfer
• Provide end-to-end FEMA compliance and NRO/NRE account structuring
• Cross-border tax planning factoring in DTAA benefits

Get Started Today

Book a consultation: Schedule a call with our NRI tax experts

WhatsApp us: +91-96677 44073 -- Share your PPF/SSY details and get a quick preliminary assessment

Email: [email protected] -- For detailed queries and document submissions

Do not wait until maturity to discover your account is irregular. Act now.

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Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. PPF and SSY rules are subject to change through government notifications. Individual cases may vary based on specific circumstances, the country of residence, and applicable DTAA provisions. Always consult a qualified Chartered Accountant or tax professional before making financial decisions. The information in this article is current as of March 2026 based on notifications and amendments available up to FY 2025-26.

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Related Topics: NRI Tax Filing India | FEMA Compliance for NRIs | NRE vs NRO Account | NRI Capital Gains Tax | NRI Retirement Planning India | Section 80C Deductions for NRIs | DTAA Benefits for NRIs

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Published by MKW Advisors | Legal Suvidha | DigiComply -- Trusted NRI Tax & Compliance Advisory