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Can I close my PPF account as an NRI 58 year old?

Milind

Milind Vadjikar  | Answer  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 03, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
SHARDENDU Question by SHARDENDU on Oct 01, 2024Hindi
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Dear Sir, I have opened my PPF account in 2015 through axis bank.My age is now 58 years. In 2020 I left India . But I didn,t mention anything in my PPF account.Presently I am an NRI..I have an NRI account in axis bank.What I should do whether I can close my PPF account.If I come back to India . What will happen to my PPF account. Waiting for your response .Regards

Ans: Yes you can close your ppf account when you return to India. Bank will return your balance funds after closure.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 15, 2024Hindi
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Hello Sir, I had opened a PPF account in the year 2004, wherein I deposited at least Rs 10,000 per annum in each year till the year 2018. Subsequent to 2018, I did not deposit any further amount in my PPF account. Currently, my PPF account is treated as dormant, however every year interest is credited to my PPF account. I have not withdrawn from my PPF account so far. I have been advised to withdraw my PPF balance and close my account. My questions are as follows: 1) Is the interest income of PPF interest accrued so far, taxable and whether to be disclosed in the income tax returns? 2) Can I change the status of my PPF account from dormant to active? What are the documents required for it and the procedures involved? 3) If I choose to close my PPF account, will the PPF proceeds be subject to deduction of tax? 4) If I choose to continue with my PPF account without making any contributions, will it earn interest till the date of closure of PPF account? Thanks in advance.
Ans: Thank you for your detailed inquiry. Let’s address each of your concerns step-by-step to help you make an informed decision regarding your PPF account.

1. Tax Implications of PPF Interest Income
Tax Exemption Status
Public Provident Fund (PPF) is one of the most tax-efficient investment options in India. The interest accrued on PPF is completely tax-free under Section 10(11) of the Income Tax Act, 1961.

Reporting in Income Tax Returns
Since the interest earned on PPF is tax-free, you are not required to disclose this interest income in your income tax returns. This holds true as long as the PPF account remains active or dormant, and interest continues to be credited.

2. Reactivating Your Dormant PPF Account
Procedure to Reactivate
To change the status of your PPF account from dormant to active, follow these steps:

Submit a Written Request: Visit your bank or post office where the PPF account is held and submit a written request to reactivate the account.

Pay the Minimum Contribution: You will need to pay the minimum annual contribution of Rs 500 for each year the account was dormant. Since your account has been dormant since 2018, calculate the total contribution required (Rs 500 per year x number of dormant years).

Penalty Payment: A penalty of Rs 50 per inactive year is also required.

Submit Required Documents: Provide necessary documents such as your PPF passbook and identity proof.

Documents Required
PPF Passbook
Identity Proof (Aadhar, PAN, etc.)
Written application for reactivation
Once these steps are completed, your account will be reactivated and you can continue making contributions.

3. Closing Your PPF Account
Procedure to Close the Account
If you choose to close your PPF account, visit the bank or post office where your account is held and submit a closure application. You will need to fill out Form C (Application for Withdrawal) and submit it along with your PPF passbook and identity proof.

Tax Implications on Closure
The proceeds from your PPF account, including the principal and interest earned, are completely tax-free. There is no tax deduction on the amount received upon closure.

4. Continuing the Dormant PPF Account
Interest Accrual on Dormant Account
Even if you do not make any further contributions, your PPF account will continue to earn interest until it matures. The interest rate is set by the government and is subject to periodic changes. This interest will continue to be credited to your account annually until the maturity date.

Evaluating Your Options
Reactivating vs. Continuing Dormant
Reactivating: This option allows you to continue benefiting from the tax-free returns of PPF by making the minimum contributions and paying the penalty. It keeps the account active and provides flexibility for future contributions.

Continuing Dormant: If you prefer not to make further contributions but want to keep earning interest, allowing the account to remain dormant is a viable option. The account will continue to grow with interest until maturity.

Closing the Account
If you need immediate access to funds or prefer to invest elsewhere, closing the account is straightforward and tax-efficient. The full amount received will be tax-free.

Strategic Recommendations
Diversify Investments
While PPF is a secure and tax-efficient investment, consider diversifying your portfolio for better returns. Options include:

Mutual Funds: Actively managed mutual funds can offer higher returns compared to PPF.
Equity Investments: For higher risk tolerance, equity investments provide potential for significant growth.
Maintain a Balanced Portfolio
A balanced portfolio includes a mix of fixed-income securities like PPF and higher-growth investments like mutual funds and equities. This strategy optimizes returns while managing risk.

Final Thoughts
Your decision should align with your financial goals and liquidity needs. Reactivating the account provides flexibility, while continuing with a dormant account or closing it can meet immediate financial needs.

Conclusion
Your PPF account offers flexibility and tax-free returns, making it a valuable part of your portfolio. Whether you choose to reactivate, continue as dormant, or close the account, each option has its benefits.

Tax-free Interest: PPF interest remains tax-free.
Reactivation: Pay contributions and penalties to reactivate.
Closure: Tax-free proceeds upon closing the account.
Dormant: Interest continues until maturity.
Make an informed decision based on your financial goals and requirements.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ans: Yes, Your Honor.

Before making any predictions, I would like to address the issue of tuition fees. You can obtain an education loan through the Vidyalakshmi portal at a nearby nationalized bank. Additionally, some trusts, such as Tata and Reliance, offer scholarships to eligible candidates. If you are not already aware of this, I encourage you to visit the Vidyalakshmi portal for more details and to proceed accordingly.

Regarding placements, the institution will provide you with a platform to participate in campus recruitment drives. However, you will need to respond to questions from recruiters during these drives. Thus, in addition to meeting eligibility requirements, it is essential to develop the necessary skills to compete effectively with other candidates. Participating in campus drives is more beneficial than seeking opportunities elsewhere, as you will gain insight into your competitors' strengths and weaknesses. If you miss this opportunity, it may not present itself again. Therefore, instead of questioning the institution, I urge you to focus on preparing yourself for the campus drive.

In terms of academic culture, it is important to ask more questions and seek clarification from your mentors or lecturers. Most of the faculty members are available to support you, so make the most of their assistance to enhance your position.

Please note that this institution is private and autonomous. I recommend that you familiarize yourself with the syllabus, available facilities, and the qualifications of the faculty members.

That is all, Your Honor.
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Our son got cse seat at KLU Vijayawada and comedk rank 77400 , we may get tier2 colleges in Bengaluru. What is your suggestion to choose either of two options
Ans: Murali Sir, Koneru Lakshmaiah University (KLU) Vijayawada is a UGC Category-1 deemed university with NAAC A++ grading and NBA-accredited CSE, offering a well-structured ACM-aligned curriculum, modern software and AI labs, and a 20 Gbps campus network. CSE students have enjoyed 100% placement eligibility with major recruiters like Wipro, Infosys, TCS, and Amazon visiting annually, yielding an average package of ?7 LPA and median ?8.2 LPA over the last three years. Experienced PhD faculty, active industry MoUs, and robust internship opportunities from the second year underpin its academic rigor and professional preparedness.

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recommendation Opt for KLU Vijayawada CSE to leverage its top-tier accreditation, assured placement eligibility, advanced labs, and extensive recruiter network. Consider a Bengaluru tier-2 college only if proximity, lower fees, or specific state quota advantages outweigh the benefits of KLU’s superior infrastructure, consistent placements, and research environment. All the BEST for a Prosperous Future!

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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