NRIs can continue to invest in the PPF account

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I recently left India but still hold a Public Provident Fund (PPF) account. Can I deposit more money into this account now that I am a Non-Resident Indian (NRI)? Will I be penalized if I don’t deposit money into the account?

—Name hidden on request

NRIs can continue to invest up to ₹1.5 lakh in their existing PPF accounts each financial year. You can also claim a deduction under Section 80C for PPF filing if you are filing an income tax return in India. You can invest in your PPF account until maturity, but you cannot extend the account after it expires.

My son has been studying in the United States for five years and could stay there for a few more years. He’s 23 now. To invest in mutual funds in his name, I asked him to create a “direct connection account” on a mutual fund website. But in the required KYC process, he was taken aback by the question, “Are you a person from the US / Canada?” »Should he answer yes or no? He has no financial interests or income in the United States. He received an allowance and filed his US income tax return for a year.

—Name hidden on request

A person may be considered a “US person” if they are a citizen of or reside in that country and are required to file an income tax return under local laws. The United States Department of Taxation enacted the Foreign Account Tax Compliance Act (FATCA) in 2010 to promote tax compliance and discourage tax evasion. An agreement between India and the United States requires India to declare investor FATCA compliance. The international version of FATCA is called CRS or Common Reporting Standards, which also requires a person to make certain self-reports to ensure that they are in compliance with the requirements of their local tax laws. It is recommended that your son register as a US citizen.

Archit Gupta is founder and CEO of ClearTax.

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