Public Provident Fund (PPF) is currently a popular investment option amid the declining interest on deposits after Corona. This is because PPF is still getting interest at the rate of 7.1 per cent. At the same time, the rate of interest on fixed deposits (FD) has come down to below six per cent.
However, on the one hand while the PPF account gets the benefit of higher interest and tax exemption, on the other hand, the account holder has to suffer three kinds of losses if the account becomes inactive before maturity. Let us know what is the loss when PPF account becomes inactive.
Disadvantages of Account Inaction
1. The government has made a significant change in PPF rules in 2016. In this, the government has allowed the closure of PPF account before maturity under certain circumstances. The situations where the account closure facility is provided include expenses for the treatment of life-threatening illness or education of the child. However, the contributors can do so only after the PPF account runs for five years. This facility is not available with inactive PAPF account.
2. The loan can be taken from PPF account after the third financial year till the end of the sixth financial year. This facility is not available in a closed PPF account.
3. If the account holder wants to open a PPF account other than a closed PPF account, the rule does not allow it. No single person can have two PPF accounts. However, the amount of interest is paid on the maturity period on the deposit in the inoperative account also.
PPF: What to do if the account matures? You have these three options
Main reason for account being active
According to experts, the main reason for account dormancy is not to invest even the minimum amount in it. It is mandatory to invest 500 rupees every year in PPF account. For 15 years, the investor has to deposit at least this amount. If not, the account becomes inactive. At the same time, investors can get the benefit of income tax exemption under Section 80C of Income Tax by investing up to a maximum of Rs 1.5 lakh in PPF account on an annual basis.
Penalty will have to be given 50 rupees on annual basis
To reopen PPF account, you have to go to the bank or post office where you have opened it. Here you have to fill a form to reopen the account. After this you will have to pay the outstanding amount. That is, for every year you have not deposited, you will have to pay a minimum of Rs 500 for every year. If you have not deposited four years, then you have to deposit 2000 rupees. Along with this, a penalty of Rs 50 will also have to be paid every year.
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