NRIs are not allowed to make fresh deposits in PPF account

Can an NRI purchase foreign currency in India through cheque payment from his NRO account? If yes, are there any formalities to complete? Can a power of attorney holder in an NRO account purchase foreign currency of the NRI’s country and send it to the NRI?

—Dilip Saksena

Yes, you can use your NRO account balances to make cheque payments in India.

In case you want to receive your NRO balances in a foreign country, RBI allows NRIs to remit balances in NRO account up to $1 million in a financial year. Do note that tax on such income received in NRO account, which is proposed to be repatriated, must have been paid in India. Certain remittances made from an NRO account may require Form 15CA and Form 15CB from a chartered accountant.

I recently got a permanent residency of Canada and plan to move to Toronto by April 2019. I have investments in FDs and PPF for five years, and mutual funds (one year). Can I continue to hold them or will I have to liquidate it? From a tax perspective, what is a better option?

—Simran Ahuja

RBI regulations require that NRIs must convert all their resident savings and deposit accounts to non-resident accounts [non-resident external (NRE) or non-resident ordinary (NRO)] upon their departure from India when they plan to settle abroad. NRIs cannot make fresh deposits to their PPF accounts; however, they can continue to hold their pre-existing PPF accounts, which were opened while they were resident, until maturity period, which is 15 years. You may continue to hold your mutual funds too. Accretions to PPF accounts are not taxable in India, however, once you become a tax resident of Canada, you will have to check your local laws to find out how these incomes will be taxed in Canada.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com