Under Section 80C of the Income Tax Act, a Public Provident Fund (PPF) account allows individuals to invest up to Rs 1.5 lakh per year and also offers a tax rebate. The account is effective for 15 years and every fiscal year the account holder is required to deposit a minimum of Rs 500. The account holder has to submit a written application to the bank or the post office branch where the account is held for the recovery of an expired PPF account. During the 15 year duration of the account, the application can be rendered at any time. For each financial year, the investor will be allowed to deposit a minimum of Rs 500 for the duration wherein the account was dormant. It is necessary to submit the cheque as well as the application to the branch at the same time.
For every fiscal year in which the account was in a dormant condition, the bank or post office imposes a penalty of Rs 50 to restore the account. The penalty has to be deposited concurrently with the settlement in arrears. The bank or post office evaluates the application with your documents after the application is received. If the deposit term (15 years) has expired, it is impossible to reopen the account. However, by paying the penalty, one can access the maturity benefits.
Points to remember
- And while it is inactive, the balance in a PPF account tends to gain interest.
- A loan can’t be availed against a dormant PPF account.