What Happens to an Individual's Provident Fund (PF) When Status Changes to NRI?

Neha Navaneeth
Marketing & Content Associate
Oct 13, 2025
Moving abroad marks a major financial transition, and one of the first questions many individuals have is about NRI PF withdrawal. The provident fund which comprises both the employer-linked EPF and personal PPF, is governed by a distinct set of rules once the residency status changes to Non-Resident Indian (NRI). Ignoring these NRI provident fund rules can lead to compliance issues, unexpected tax liabilities, and loss of interest.
This guide provides a definitive look at NRI PF withdrawal, detailing the process, tax on PF withdrawal for NRIs, and continuation options.
EPF vs. PPF
Before examining NRI provident fund rules, it is helpful to clarify the two main components of the provident fund system in India, as they are treated differently under FEMA (Foreign Exchange Management Act) guidelines:
Feature | Employees' Provident Fund (EPF) | Public Provident Fund (PPF) |
Purpose | Mandatory retirement savings for salaried employees. | Voluntary long-term savings and tax-saving scheme for any Indian citizen. |
Contributions | Mandated 12% contribution each from employee and employer. | Voluntary annual contribution up to ₹1.5 lakh from the individual. |
Governing Law | Employees' Provident Fund and Miscellaneous Provisions Act, 1952. | Public Provident Fund Scheme, 2019 (under the Ministry of Finance). |
Repatriation | Generally fully repatriable upon withdrawal. | Non-repatriable (funds must be credited to an NRO account and are subject to FEMA repatriation limits). |
What Changes for the PF Account When NRI Status Is Attained?
The moment an individual's residential status shifts from 'Resident' to 'Non-Resident Indian' under FEMA, the rules of both accounts are immediately affected.
Mandatory Closure of Employees' Provident Fund (EPF)
The EPF scheme is fundamentally tied to salaried employment within India. Once an individual becomes an NRI, EPF account closure for NRIs becomes mandatory when employment in India ceases.
No Further Contributions: Contributions stop immediately upon the cessation of Indian employment.
Withdrawal Eligibility: EPF withdrawal for NRIs is deemed 'settleable' because moving abroad permanently for employment is considered an accepted reason for full withdrawal. The entire balance can be withdrawn immediately, without a mandatory waiting period.
Inactive Account Risk: If the balance is not withdrawn, the account will become 'inoperative' and will stop earning interest after 36 months of no contribution.
Crediting and Repatriation: Funds can only be credited to an NRO account. Further outward remittance follows annual FEMA limits of USD 1 million.
Continuation of Public Provident Fund (PPF) is Allowed
In contrast to EPF withdrawal for NRIs, an existing PPF account opened while the individual was a resident can be maintained, but PPF rules for NRIs come with critical restrictions:
No New Accounts: NRIs are not permitted to open a new PPF account.
Continuation Until Maturity: The existing PPF account (opened while being a resident) can be operated and contributions made until the original 15-year maturity period is complete.
Mandatory Notification: The bank or post office must be informed about the change in residency status to ensure compliance. Failure to do so may result in the interest rate dropping to the lower Post Office Savings Account rate (currently 4%).
No Extension: Unlike resident Indians, the PPF account cannot be extended beyond the initial 15-year term. The account must be closed at maturity.
Maturity Withdrawal and Repatriation: On maturity, the balance must be mandatorily withdrawn and credited to the NRO account, and is non-repatriable beyond permitted FEMA limits of USD 1 million.
Key Compliance steps to keep in mind:
Step | When to Act | Key Document |
Update Employer and EPFO with NRI status | Upon receiving visa/exit | Passport, visa, Form 19/10C |
Convert bank account associated with PF to NRO | Before withdrawal | Bank conversion letter |
Begin EPF withdrawal process (online/offline) | After cessation of employment | UAN, PAN, Aadhaar, Form 19/10C |
Notify bank/post office about PPF NRI status | Immediately after status change | Passport copy, resident proof |
Initiate PPF withdrawal at maturity | On account maturity | Account closure form, ID |
File Form 15CA/15CB for remittance above ₹5 lakh | Before outward remittance | To be filled by CA |
How NRIs Can Access Their PF
Understanding NRI PF withdrawal rules requires compliance with EPFO and RBI procedures. The withdrawn amount is generally credited to the individual's NRO (Non-Resident Ordinary) account.
Understanding NRO account features and limitations is crucial for managing your withdrawn PF funds effectively.
EPF Withdrawal Process for NRIs
Since EPF account closure for NRIs is mandatory and the account is eligible for full withdrawal upon leaving India for permanent settlement abroad, the EPF withdrawal for NRIs process can be initiated by submitting the relevant forms:
Step 1: Initiate Online Process (if KYC is Complete)
If your Universal Account Number (UAN) is linked to Aadhaar, bank account information, and PAN card, submit Form 19 (final settlement of EPF) and Form 10C (pension withdrawal) through the EPFO portal or the UMANG app.
Step 2: Offline Process (if KYC is Incomplete)
If KYC details are not completely linked, the composite claim forms must be filled manually and submitted to the former employer or the regional EPFO office.
Step 3: Submit Required Documentation
Provide visa, passport, and proof of employment cessation as documentation for "abroad settlement" to support the withdrawal request.
Step 4: Immediate Withdrawal Eligibility
Withdrawal is permitted immediately as there is no waiting period required for NRIs withdrawing EPF due to permanent settlement abroad.
Step 5: Account Conversion and Fund Crediting
Before the withdrawal can be effected, the resident bank account associated with the UAN must be converted to an NRO account. The amount is credited to the NRO account. Repatriation outside India requires compliance with bank and FEMA formalities and filing of Form 15CA/15CB for remittances above ₹5 lakh.
Here’s how you can open NRE and NRO accounts digitally without visiting India.
Step 6: Risk of Inoperative Account
If EPF is not withdrawn, the account becomes inoperative after 36 months of no contribution and interest stops accruing.
PPF Withdrawal Options for NRIs
Understanding PPF rules for NRIs is crucial. PF can be accessed prior to maturity, but only under certain conditions:
Partial Withdrawal: This is permitted upon the expiry of five financial years since the end of the year on which the account was opened. The maximum would be restricted to half of the balance as at the end of the fourth previous year or the end of the previous year, whichever is less.
Premature Closure: It is allowed after five years due to certain reasons such as financing education or medical care to family members. There is a penalty of 1% decrease in the interest rate with this closure.
Maturity: The full, accumulated balance is withdrawn and credited to the NRO account.
Step-by-Step Process for PPF Withdrawal for NRIs
Step 1: Inform the Bank or Post Office of Your New NRI Status
Notify your bank or post office immediately about your change in residency status to ensure compliance and avoid interest rate penalties.
Step 2: Continue Existing PPF Account Until 15-Year Maturity
Maintain your existing PPF account until the 15-year maturity period is complete. Do not attempt extension or open a new account, as NRIs are not permitted to do so.
Step 3: Partial Withdrawals Allowed Post Five Years
Partial withdrawals are allowed post five years under specified conditions. However, the entire corpus must be withdrawn at maturity and credited to the NRO account.
Step 4: Understand Repatriation Restrictions
Funds are non-repatriable barring annual FEMA remittance thresholds of USD 1 million from the NRO account.
Tax Implications on PF Withdrawals for NRIs
The tax on PF withdrawal for NRIs hinges on one critical period: five years of continuous service. Understanding tax on PF withdrawal for NRIs is essential for financial planning.
EPF Withdrawal Taxation
Service Period | Withdrawal Amount | Tax Implication in India | TDS Rate (If Applicable) |
5 Years or More | Any Amount | Fully Exempt from tax. | Nil (No TDS). |
Less than 5 Years | Less than ₹50,000 | Taxable, but no TDS deducted at source. | Nil. |
Less than 5 Years | Over ₹50,000 | Fully Taxable (All contributions and interest become taxable as if it were salary). | 30% (if PAN is linked) or Maximum Marginal Rate (if PAN is not linked, approx. 34.606%). |
Important Tax Caveat: Even if the five-year criteria is met for EPF withdrawal for NRIs, the interest accumulated from the last date of employment until the date of withdrawal remains taxable in India. It is advisable to withdraw immediately upon cessation of employment to minimize tax on PF withdrawal for NRIs.
PPF Withdrawal Taxation
Understanding PPF rules for NRIs regarding taxation is crucial. The PPF withdrawal enjoys the highest tax efficiency under Indian law, known as 'EEE' (Exempt, Exempt, Exempt).
Principal, interest, and maturity amount are fully exempt from income tax in India. The tax benefit remains valid even after attaining NRI status, provided the account was opened while the individual was a resident.
Overseas Tax Liability: While the PPF withdrawal is tax-free in India, NRI provident fund rules in your country of residence may differ. It may be taxable abroad. Consultation with a cross-border tax expert is mandatory to understand the tax treaty (DTAA) implications and reporting requirements.
Continuation and Repatriation of PF Funds
Repatriation Rules
The final step of moving the money out of India depends entirely on the account it is credited to:
EPF Proceeds: The funds are considered repatriable and are generally credited to an NRO account. From there, the entire amount is subject to the USD 1 million annual repatriation limit.
PPF Proceeds: Funds are credited to the NRO account and are considered non-repatriable. While the NRO account repatriation limit of USD 1 million still applies, the initial non-repatriable nature of the PPF contribution means there may be restrictions when attempting to transfer this specific money abroad.
Form 15CA and 15CB Filing: Repatriation for both EPF and PPF proceeds is possible only after filing Form 15CA and 15CB, as required by banks and the Income Tax Department for outward remittances.
Here’s a step-by-step guide for transferring funds from your NRO account to overseas accounts.
Continuation and Extension
EPF: EPF withdrawal for NRIs cannot be continued after leaving India. Immediate withdrawal after cessation of Indian employment is recommended for EPF account closure for NRIs.
PPF: Following PPF rules for NRIs, contributions can be continued up to the annual limit of ₹1.5 lakh until the 15-year maturity, but only on a non-repatriation basis. The account cannot be extended beyond the 15-year maturity period.
Quick Action Timeline for Migrants
Step 1: Obtain a Visa or Proof of Foreign Employment
Secure documentation that confirms your move abroad for employment purposes.
Step 2: Immediately Notify the Employer, Bank, and EPFO/PPF Branch About NRI Status
Inform all relevant parties of your change in residency status to ensure compliance and avoid penalties.
Step 3: Convert Resident Bank Account to NRO Before Making Withdrawals
Complete the bank account conversion process before initiating any PF withdrawal to ensure funds can be credited properly.
Step 4: Start the EPF Withdrawal Process and Apply for Closure at Earliest
Initiate EPF withdrawal immediately after cessation of employment to avoid the account becoming inoperative and to minimize tax on accumulated interest.
Step 5: Request PPF Withdrawal or Prepare for Mandatory Maturity Closure
If the 15-year maturity period is approaching, prepare for mandatory closure and withdrawal of the entire corpus.
Step 6: Assemble Required Documentation for Outward Remittance
Gather all necessary documents including Form 15CA/15CB and consult a CA if remitting large balances to ensure compliance with FEMA regulations.
The NRI PF withdrawal process might seem complex due to the multiple forms and rules, but at its heart, it is highly systematic. Understanding NRI provident fund rules and tax on PF withdrawal for NRIs is the core requirement: pay your taxes, and provide clear documentation of the fund's source.
Frequently Asked Questions
Is the employer's sign-off required for EPF withdrawal if the member is abroad?
Yes. Although EPF withdrawal for NRIs is largely online and simplified via the UAN portal, the final settlement typically requires the employer's attestation on the forms, or the claims are settled based on the employer's digital exit approval recorded in the EPFO system.
What happens if an NRI opens a new PPF account after moving abroad?
If a PPF account was incorrectly opened after a person attained NRI status, the account is deemed irregular. No interest is generally accrued on the deposits made after the date the individual became an NRI. The individual will eventually be required to close the account and withdraw only the principal amount, without the expected PPF interest benefit.
How does the DTAA (Double Taxation Avoidance Agreement) affect EPF tax?
The DTAA is crucial for managing tax on PF withdrawal for NRIs when service is less than five years. The individual can claim the benefit of the DTAA to ensure that the tax paid in India is either reduced or credited against the tax liability in the country of residence, thus avoiding double taxation on NRI PF withdrawal.
Learn more on maximizing tax benefits through Double Taxation Avoidance Agreements here.
Can an NRI keep the PPF account balance with the post office after maturity?
No. Unlike a resident Indian who can opt for non-contribution extension, an NRI is mandatorily required to close the PPF account upon completion of the 15-year maturity period. The funds must be withdrawn and deposited into the NRO account.