Non-resident Indians can inherit proceeds from these savings schemes, but the money cannot automatically be transferred to a foreign bank account
Non-resident Indians (NRIs) named as nominees in Public Provident Fund (PPF), National Savings Certificate (NSC) and Senior Citizens’ Savings Scheme (SCSS) accounts can claim the money after the account holder’s death. However, the proceeds are subject to non-repatriation rules, meaning they cannot automatically be transferred to the nominee’s overseas bank account.
- The clarification is important for Indian savers who have appointed family members living abroad as nominees
- An amendment to the Government Savings Promotion General Rules in 2023 allowed NRIs to be nominated for PPF, NSC and SCSS accounts
Being a nominee, however, does not give an NRI the right to operate the account or make fresh investments in these schemes.
How can an NRI nominee claim the money?
After the account holder’s death, the nominee must approach the bank or post office where the investment is held. The claim generally requires the death certificate, identity documents and proof establishing the nominee’s entitlement. Additional paperwork may be requested depending on the account and applicable succession requirements.
Can the money be sent abroad?
The proceeds are paid to an NRI nominee on a non-repatriation basis. If the money is subsequently held in a Non-Resident Ordinary (NRO) account, any transfer abroad must comply with Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) rules.
Eligible NRO balances can generally be remitted up to $1 million per financial year, subject to prescribed conditions. Banks may also require supporting documents and tax information.
What about taxation?
Receiving inherited savings is generally not taxable merely because the money is received through nomination or inheritance. PPF proceeds, including accumulated interest, have specific tax exemptions.
For NSC and SCSS, interest accrued up to the account holder’s death is ordinarily taxable in the deceased’s hands. Interest earned after death and before payment or maturity is generally taxable to the legal heir entitled to that income.
The key takeaway is that an NRI nominee can claim the savings, but transferring the money overseas requires compliance with applicable banking, foreign exchange and tax rules.
