Public Provident Fund i.e. PPF is a means of investment on which a large section of the country blindly trusts. Secure returns, huge tax benefits and excellent compounding profits in the long run make it the first choice for every working person. Often people open more than one PPF account in different banks or post offices in order to earn more profit. According to government rules, a citizen can maintain only one PPF account. You may have to suffer financial loss if you have two accounts.
The most basic rule of PPF is that 'one person, one account'. Whether you go to a government bank, a private bank or a post office, you should have only one PPF account. Many times people open another account to cross the annual investment limit of Rs 1.5 lakh. But this is considered irregular in government records. As soon as the tax department's attention falls on these two accounts of yours, your second account is declared illegal. This has a direct impact on your earnings, because you will not be given interest of even a single rupee on the amount deposited in another account. Apart from this, one may have to face heavy paperwork while withdrawing money at the time of maturity.
This mistake often occurs due to change of job or forgetting the old account. There is no need to panic, the government does not immediately consider it a fraud. The best way to get out of this situation is to regularize the account. You should immediately go to your respective bank or post office branch and give information about this. As per the procedure there, your earlier opened account will be considered as the main account. At the same time, after closing your second account, the entire amount deposited in it will be merged into the first account. Remember, this problem will be caught sooner or later, so it is wise to correct it in time.
Many parents also open PPF accounts in the name of their minor children for their secure future. This is completely legal. However, here too there is a technical problem which needs to be understood. The maximum investment limit in any one financial year, including both the parent's own account and the child's account, remains only Rs 1.5 lakh. This means that by opening a child's account, your tax exemption limit of Rs 1.5 lakh does not increase to Rs 3 lakh. Another thing to keep in mind is that PPF account is always opened in individual name only, it cannot be opened as a joint account with anyone.
If you have shifted to another city or are dissatisfied with the services of your existing bank, then do not make the mistake of opening a new PPF account. The easiest solution to this is to transfer the account. You can transfer your old PPF account from one bank to another bank or post office without any hassle. In today's digital era, most of the big banks are providing the facility of online PPF transfer and management. In such a situation, even after moving to a new place, your old account will continue to operate smoothly without any legal hindrance.
Read this also- When will 8.25% interest of PF come into the account? Before checking passbook, know the complete process of receiving money.
