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Discontinued Public Provident Fund (PPF) Account: Implications, How To Revive It

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New Delhi: Public Provident Fund or PPF is a popular savings instrument in India which is used to create long-term wealth that can meet goals like retirement, children’s higher education, children’s marriage etc. PPF is a government-backed savings instrument that gives higher interest compared to fixed deposit and also provides tax benefit. PPF investments fall under the EEE or ‘Exempt Exempt Exempt’ category, which means the money you invest in PPF, annual interest and the maturity proceeds are exempt from tax. PPF also provides other benefits like partial withdrawal, loan facility etc. However, these benefits will be available to you if you continue your PPF account for its entire 15 years tenure. The rate of interest on a PPF account is fixed every quarter by the government.

PPF account requires you to deposit a minimum amount of Rs 500 in a year while the maximum amount allowed is Rs 1.5 lakh. If you fail to deposit the minimum amount of Rs 500 in a specific financial year, then your PPF account will become inactive. Once your PPF account becomes inactive you can’t close it before completion of 15 years although premature closure is allowed after completion of five years in specific circumstances. Even taking a loan is not allowed from a discontinued PPF account.  So, it is advisable to revive your PPF account if by chance you forget to deposit one year’s contribution and it has become inactive.

How to revive an inactive PPF account

To revive your inactive PPF account, you have to visit your respective bank or post office where you have opened your PPF account. You have to submit an application to the bank/post office to revive the PPF account and have to pay a penalty of Rs 50 for each year of default along with Rs 500 minimum yearly contribution as arrear payment for each year of default including contribution for the year in which you revive your account.

Even in case of a discontinued/inactive PPF account interest gets accumulated every year and the maturity amount becomes huge due to the compounding effect. So, financial planners advising continuing PPF account till maturity.

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