If you are NRI OR NRI Status holder soon PPF account is halved

New Delhi: As your residency status changes to non-resident Indian (NRI) if you holding Public Provident Fund (PPF) and National Savings certificate (NSC) accounts will now be deemed to be closed as your PPF account in such case will earn 4% while NSC account will feed you the rate given in post office saving account. Beforehand it uses to give interest income of 7.8% at present which higher than bank offer. The notification said “Provided that if a resident who opened an account under this scheme subsequently becomes a non-resident during the currency of maturity period, the account shall be deemed to be closed with effect from the day he becomes NRI, the interest with effect from that date shall be paid at the rate applicable to the post office saving account up to the last day of the month preceding the month in which the account is actually closed”. A person consider resident if he is country 182 days or more in year or 60 days in year and365 in each of preceding four years as per Income Tax Act. Though it’s different with FEMA (foreign management Act.)

Alternative suggested by S Sridhar a Business Head Financial Planning Wealth Ladder Investment Advisor to money control” The accumulation in PPF/NSC can be withdrawn. The return will not even beat inflation and hence it is advisable to opt for better alternatives.’ That was also said by Rahul Agarwal, director Wealth Discovery. Personal Finance advisors says the issues to decide were they will be settle as base in India or where they currently residing.

Anil Rego, CEO  of Right  Horizons says if an NRI has plans to return to India and wants to have retirement  corpus back home, then they should consider investing in National Pension System(NPS) “If you plan to come back to India in the long-term and your retirement need are unmet you should consider NPS as an alternative. NPS gives you different fund options depending on your risk-appetite. The returns in NPS will be higher compared returns in any investments in developed markets. He added further “If an NRI in the US is unsure of future plans and could settle down there after retirement, NPS will not make sense. They will have to disclose the investment and the annuity under FATCA. If you are an NRI in Gulf countries, you should consider NPS in any which way since they are not subjected to any kind of tax. NPS is best for NRIs in Gulf countries because such NRIs don’t have great option to settle in those countries after retirement. Since they will come back to India after 25-30 years of working life, use NPS to build a solid retirement corpus through a combination of equity and debt,” Rego said.

Agarwal said NRIs who would have accumulation in their PPF/NSC accounts can consider equity and debt mutual funds to park their funds, besides other safe options such as govern securities. Reports as per money control.