PPF Account: Your PPF account is inactive? This is how you can be active, learn how

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PPF is the most popular investment instrument among small savings schemes. But many people forget to deposit the money on time due to which the account becomes inactive. So here know how to activate inactive account.




Public Provident Fund (PPF) is one of the most popular small savings schemes that offer relatively better rate of interest among its category of investment options. PPF is a government-backed debt-oriented instrument that fetches a floating rate of interest which is fixed by the government every quarter. The interest rate on PPF savings account currently stands at 7.1%. The interest rate on investment is compounded on a yearly basis. It is calculated on the basis of the minimum balance in the account between the 5th and end of every month. Many people forget to deposit money in PPF account on time which makes their accounts inactive. Here we are going to let you know how to activate a dormant account.

As per the rules of PPF account, a dormant account can be reactivated by depositing only Rs 500 in a financial year. Failure to do so will result in the account becoming inactive. Therefore, it is advised to deposit Rs 500 in the PPF account by 31st March of every financial year cycle to keep the PPF in active mode.

If a PPF account has been lying dormant for years then it needs to be deposited with a fine of Rs 500 per annum and Rs 50 for each non-paying year. This means if an account is inactive for three years, then a deposit of Rs 1650 i.e. Rs 1500 (500×3) and a fine of Rs 150 (50×3) will have to be paid.

PPF offers the double benefit of wealth creation through a compounding effect and provides tax relief on income. An individual can invest up to Rs 1.5 lakh per year in a PPF account. PPF falls under the ‘exempt, exempt, exempt’ or EEE category which means the investment amount, interest earned on interest and maturity amount are all tax-free.

PPF savings scheme has a maturity of 15 years but investors can withdraw money after 5 years of account opening subject to certain conditions. However, any deposit or withdrawal can be made only through an active PPF account. If your PPF account has become inactive, it can be revived.

A depositor can withdraw money after the maturity period of 15 years or it can be extended for another 5 years, failing which PPF comes under the ambit of ‘extension without contribution’.

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Article first Appeared on Informalnewz

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