A Public Provident Fund (PPF) account is a government-guaranteed Small Savings Scheme. It pays a fixed rate of return (now 7.1%) that is declared every quarter. Under Section 80C of the Income Tax Act, it exempts investments up to Rs 1.5 lakh from taxation. Furthermore, both the annual interest and the maturity amount are tax-free.
Simple steps to create a PPF account
The PPF account has a 15-year lock-in term.
However, you can withdraw funds from the account for a variety of reasons, including a medical emergency, your children's education, the construction or purchase of a home, and so on.
A borrowing against your PPF account is also possible. However, these services are only available to active accounts who make a deposit at least once a year.
What happens if you fail to make the required PPF contribution?
Your account will become inactive, but the PPF rate of interest will continue to accrue. However, if you want to take use of the other advantages listed above, you must activate it. Let's have a look at how to do it.
What happens when a PPF account is inactive?
Every financial year, they must deposit a minimum of Rs 500 in their PPF account. If you don't do so, your account will become inactive.
How do I reactivate a dormant PPF account?
You must submit a written request to your bank or post office branch where your PPF account is located.
Following that, you must deposit Rs 500 for each year the account has been inactive, as well as Rs 500 for the current financial year.
You must additionally pay a penalty of Rs 50 for each year that has passed. Along with the application, these deposits must be made at a bank or post office branch.
The bank or post office branch will verify your records when the application and cheque deposit are completed. The account cannot be renewed after the 15-year lock-in term has expired.
Also, if your current PPF account is inactive, you will not be able to register a new one in your name.
PPF is one of the greatest long-term investing options for long-term goals like saving for your children's education or establishing a retirement corpus. Regularly invest in the PPF and take use of the maximum tax exemption limit of Rs 1.5 lakh to get the most out of it.
Axis Bank has been granted permission by the Indian government to provide PPF account services to its customers.
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