PPF Rules for NRIs: Can Parents Contribute to Their Children’s PPF Account After They Move Abroad?

Indians who move abroad often continue to hold investments and bank accounts in India, but a change in residential status raises compliance questions. One common scenario involves parents contributing to a child’s Public Provident Fund (PPF) account after they become a non-resident.

Scenario: Maintaining a Daughter’s PPF Account

Consider a daughter who moved to the UK in 2024 after marriage. She opened her PPF account in 2016 while residing in India and also holds joint savings accounts with her mother. 

With no current source of income in India, her parents wonder whether they can deposit ₹1.5 lakh per year in her PPF account to keep it active or if it must be closed before the 15-year maturity. The mother also has her own PPF account with yearly contributions of ₹1.5 lakh and is concerned about tax implications.

PPF Rules for NRIs

Under FEMA regulations, a non-resident Indian cannot open a new PPF account. However, they can continue contributing to an existing PPF account that was opened while they were a resident. The account cannot be extended beyond the original 15-year term or any prior extensions.

The money in a PPF account is non-repatriable, meaning that maturity proceeds must be deposited into the NRO account of the account holder. NRIs can remit up to $10 lakh annually from the NRO account after paying applicable taxes, if any.

To keep a PPF account active, only a minimum deposit of ₹500 per year is required, even if parents want to maintain contributions. Additionally, the maximum tax deduction under Section 80C is already utilised by depositing ₹1.5 lakh in their own PPF account, so additional contributions to the daughter’s account will not yield extra tax benefits.

Parental Contributions and Account Management

If parents want to deposit the full ₹1.5 lakh in the child’s PPF account, it is advisable to gift the amount to her, allowing the deposit to be made directly from her bank account. The daughter must inform the bank about her NRI status, after which her existing savings accounts will be redesignated as NRO accounts.

There is no need to change her status as the first holder in the joint savings account with her mother. The contribution can continue as before, keeping the PPF account active until the original maturity period without violating any rules.

Read More:Understanding Why Public Provident Fund PPF Is a Tax-Free Investment

Conclusion

This scenario demonstrates how PPF rules accommodate NRIs, allowing parents to help maintain an existing PPF account while ensuring compliance with contribution limits and residential status requirements. Proper planning ensures the account remains active and the funds continue to grow until maturity.

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