Are PPF Maturity Proceeds Fully Tax Exempt For NRIs

Generally, one does not have to file ITR as long as the aggregate of income from all the sources taken together before various deductions does not exceed the amount of basic exemption. Under the old tax regime, the basic exemption limit is Rs. 2.50 lakhs for taxpayers below sixty years of age, for those between 60 years and 80 years, the applicable basic exemption limit is Rs. 3 lakhs, and for those over 80 years, it is Rs. 80 lakhs.

Under the new tax regime, the threshold for all individual taxpayers is Rs. 3 lakhs. So, as long as your total income does not exceed the basic exemption limit applicable to you, based on your age and the tax regime chosen by you, there is no mandatory requirement for you to file an ITR. However, there is no harm in filing the ITR even if you are not required to do so mandatorily, as it may come in handy while making a visa application or for applying for a home loan, etc. Filing of your ITR helps you keep your records straight.

Under the old tax regime, the deduction for interest under Section 24(b) on a home loan taken for the purchase of a house is restricted to Rs. 2 lakhs if the house is self-occupied. If the house is let out whole of such interest can be claimed under Section 24(b), subject to the restriction on set off of loss under the head “Income from house property” against other income, which is restricted to two lakh rupees. The balance of unabsorbed loss can be carried forward for set-off in the next eight years against house property income.

If you opt for the new tax regime, no interest is allowed for self-occupied property. In respect of let out property interest paid to the extent of taxable rent only is allowed as loss under house property is not allowed to be set off against other income under new tax regime.

The deduction in respect of interest is available as long as the house is actually let out, irrespective of whether this is your sole house or an additional house. As far as tax benefits for HRA are concerned, as long as you are paying rent in respect of a house occupied by you for which you are paying rent and which is not owned by you, the same is available to you even if you own any other residential property.

The maturity proceeds of PPF account comprise of interest and principal amount. As per the present provisions of the Income Tax Act, 1961, interest credited in a PPF account is exempt from income tax. Moreover, the principal money received on maturity is also fully exempt. This treatment is the same for residents as well as for non-resident taxpayers, so the maturity proceeds you receive will be fully exempt.

Please note that the money received as maturity proceeds cannot be repatriated directly and has to be credited to your NRO account. An NRI can remit up to 10 lakh USD every year, including the money received on PPF maturity.