PPF Account: Your PPF account has been discontinued and you want to revive it? Learn the process..
The Public Provident Fund (PPF) is a very popular long-term investment option that not only offers excellent returns but also tax benefits. Deposits in PPF are tax-deductible under Section 80C, the interest earned is tax-free, and the maturity amount is tax-free. It is a Triple E (EEE) category investment, considered the best for tax savings.
However, sometimes, due to some reasons, we forget to make the minimum annual deposit in our PPF account, and as a result, our PPF account becomes discontinued or inactive. If your PPF account has been discontinued, there is no need to worry. It can be revived. Let's learn how to reactivate a discontinued PPF account, the penalty, and the rules.
Why does your PPF account get closed?
The most common reason for PPF account discontinuation is not making the annual minimum deposit. To keep a PPF account active, it's necessary to deposit at least ₹500 each financial year. If you don't make this minimum deposit in any financial year, your account is placed in the 'discontinued' category.
Why is it important to revive a discontinued PPF account?
The account continues to earn interest even after it's closed, but why is it important to revive it? Understand the reason:
Loan and Withdrawal Facility
When your account is discontinued, you can no longer take out a loan or avail partial withdrawals. You can only use these facilities after your account is revived.
Full Amount on Maturity
If your account remains closed and you don't revive it, you will only receive your deposited amount and the accrued interest on it upon maturity. However, after reviving it, you can complete the account with all the benefits.
Tax Benefits
Only an active PPF account allows you to fully avail the tax benefits under Section 80C.
The Complete Process to Revive a PPF Account
Reviving a discontinued PPF account is a simple process. Follow these steps:
Step 1: Contact Your Branch
First, you need to visit your bank branch or post office where your PPF account is open.
Step 2: Fill out the Application Form
There, you will need to fill out an application form for PPF account revival. You can get this form from the bank or post office. In this form, you'll need to fill in your account details, penalty details, and the outstanding minimum deposit.
Step 3: Deposit the outstanding minimum deposit
You'll need to make a minimum deposit of ₹500 per year for each year your account has been discontinued.
Step 4: Pay the penalty
In addition to the minimum deposit, you'll also need to pay a penalty of ₹50 for each discontinued year.
Example: If your account has been closed for 3 years, you'll need to pay a penalty of (₹3 x ₹50) = ₹150. Thus, you'll need to deposit a total of (₹1500 + ₹150) = ₹1650. You can deposit this amount via cash or check.
Step 5: Submit Documents
Along with the application form and payment slip, you may also need to submit some other necessary documents, such as a copy of your PPF passbook, identity proof, and address proof. However, in most cases, just the passbook and form are sufficient.
Step 6: Update Passbook
After the entire process is complete, be sure to update your PPF passbook to reflect the new status and deposited amounts.
Important Points to Remember
No Time Limit: There is no time limit for reviving a PPF account. You can reactivate it at any time, until the account matures.
Revive Before Maturity: If your PPF account has matured and you don't revive it, you won't be able to extend it after maturity. Therefore, it's best to revive it before maturity.
Interest will continue to accrue: Even after your account is discontinued, it continues to earn interest at the fixed PPF rate. This is a major advantage, as your money does not stop earning returns.
Online Revival: Currently, there is no facility to revive a PPF account online. You will need to physically visit your bank or post office branch.
PPF Account Extension and Discontinuation
If your PPF account has matured (i.e., completed 15 years) and was discontinued, you cannot extend it. In such a case, you will have to renew it upon maturity.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
