Your PPF account has been discontinued, and you want to revive it? Learn the process and the penalty!
If you haven't deposited a minimum of ₹500 annually into your Public Provident Fund (PPF) account, your account may be discontinued. There's an easy way to reactivate such an account, but there are certain conditions and penalties. Here's the step-by-step revival process, applicable charges, and required documents.
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's a Triple E (EEE) category investment, considered the best for tax savings.
However, sometimes, for various reasons, we forget to make the annual minimum deposit in our PPF account, and as a result, our PPF account becomes discontinued or inactive. If your PPF account has been discontinued, there's 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 per financial year. If you fail to deposit this minimum amount in any financial year, your account is placed in the 'discontinued' category.
Why is it important to revive a discontinued PPF account?
Even after the account is closed, interest continues to accrue, but why is it important to revive it? Understand the reason:
Loan and Withdrawal Facility
When your account is discontinued, you cannot take out a loan or avail partial withdrawals. You can only use these facilities after the account is revived.
Full Amount on Maturity
If your account remains closed and you do not revive it, you will receive only 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 the bank branch or post office where your PPF account is open.
Step 2: Fill out the application form
There, you'll 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 the number of years your account has been discontinued.
Example: If your account has been closed for 3 years, you'll need to deposit (3 x ₹500) = ₹1,500.
Step 4: Pay the Penalty
In addition to the minimum deposit, you must also pay a penalty of ₹50 for each discontinued year.
Example: If your account has been closed for 3 years, you must pay a penalty of (3 x ₹50) = ₹150. Thus, the total amount you must deposit is (₹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 the Passbook
After the entire process is complete, be sure to update your PPF passbook to reflect the new status and the deposited amounts.
Important things 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.
Reviving 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 better to revive it before maturity.
Interest continues: Even after your account is discontinued, it continues to earn interest at the fixed PPF rate. This is a major benefit, as your money doesn't stop earning returns.
Online revival: Currently, there is no facility to revive a PPF account online. You must physically visit your bank or post office branch.
PPF Account Extension and Discontinuation
If your PPF account has matured (i.e., 15 years have passed) and was discontinued, you cannot extend it. In this case, you will receive the deposit amount and interest on maturity.
If your account is active and has matured, you can extend it for 5 years each without any fresh deposit (iron mode) or with a fresh deposit (continuation mode).
FAQs
Q1: How long can a PPF account be revived after being closed?
A1: There is no time limit for reviving a PPF account. You can revive it at any time, until the account matures (i.e., 15 years have passed).
Q2: If my PPF account is discontinued, will I receive interest on it?
A2: Yes, if your PPF account is discontinued, it continues to earn interest at the fixed PPF rate. This is a major benefit.
Q3: What is the penalty for reviving a PPF account?
A3: To revive a PPF account, you must pay a penalty of ₹50 for each discontinued year, along with a minimum deposit of ₹500 for each year in which you did not make a deposit.
Q4: How can I revive my discontinued PPF account?
A4: You must visit your bank branch or post office where you have your PPF account. You must fill out the revival application form and submit it along with the outstanding minimum deposit and penalty.
Q5: Can a PPF account be revived online?
A5: Currently, there is no facility to revive a PPF account online. For this, you will need to physically visit a bank or post office.
Q6: If my PPF account is discontinued, can I take a loan or withdraw funds from it?
A6: No, if your PPF account is discontinued, you cannot avail of the loan or partial withdrawal facility. To avail these facilities, you will need to revive your account first.
