Public Provident Fund (PPF) is the most popular and easiest option for tax saving and investment. You can start investing in PPF with as little as Rs 500. 1.5 lakh rupees can be invested in this in a year. Talking about tax benefits, it gives tax exemption under section 80C on investments. At the same time, there is no tax to be paid on interest income and on maturity amount. A minimum of Rs 500 has to be deposited every year in the PPF account. If Rs 500 is not deposited in any financial year, then the PPF account becomes inactive.
Due to inactive account, other benefits available through PPF are also not available. In such a situation, it is necessary to continue investing in it. At the same time, if for some reason the PPF account has become inactive, then there is no need to worry. A closed PPF account gets activated easily. For this some fine has to be paid and some paperwork has to be done.
How to get it back on again (How to revive deactivated PPF account)
To restart PPF account, you have to visit the bank or post office where you have opened your PPF account. Here you have to fill a form to get the account activated again. Along with this, you will have to pay the arrears amount for the years in which you have not invested in it and also have to pay a penalty of Rs 50 per annum.
calculate like this
In the case of PPF, the penalty and arrears math is not very complicated. Let’s say your PPF account is closed for 4 years. So you will have to pay arrears of Rs 2,000 for four years. Along with this, you will have to pay a penalty of Rs 200 at the rate of Rs 50 per annum.
Disadvantages of Deactivated PPF Account
In 2016, the government has allowed closure of PPF account before maturity under certain circumstances. These situations include the treatment of a life-threatening illness or the expenses for the education of the child. The investor can do this only after the PPF account has run for five years. Apart from this, after the third financial year, till the end of the sixth financial year, loan can be taken against the balance in the PPF account. This benefit is not available in the inactive PPF account.