Importance of PPF Accounts

The Public Provident Fund (PPF) is a popular and secure investment option in India. It offers:

• Attractive Interest Rates: Competitive returns with no risk of money sinking.
• Tax Benefits:
  • Investments are eligible for tax deduction under Section 80C.
  • Interest income and maturity amounts are tax-free.
• Flexibility: Investment starts at ₹500 per year, with a maximum limit of ₹1.5 lakh annually.

However, if you fail to deposit the minimum amount of ₹500 in a financial year, your PPF account becomes inactive. This leads to the suspension of facilities like partial withdrawal and loan options.

Steps to Reactivate an Inactive PPF Account

Reactivating a closed PPF account is straightforward. Follow these steps:

1. Visit Your Bank or Post Office:

   • Go to the branch where your PPF account is maintained.

2. Fill Out the Reactivation Form:

   • Request and complete the form for reactivating your account.

3. Clear Outstanding Arrears:

   • Deposit the unpaid amount for each year of inactivity.

4. Pay the Penalty:

   • A penalty of ₹50 is charged for each inactive financial year.

Example of Penalty Calculation

If your PPF account has been inactive for 4 years:

• Arrears: ₹500 per year × 4 years = ₹2,000
• Penalty: ₹50 per year × 4 years = ₹200
  Total Amount: ₹2,200

Early Closure of PPF Account

Since 2016, the government allows premature closure of PPF accounts in specific cases, such as:

• Life-threatening illnesses.
• Educational expenses for children.

Condition: This facility is available only after completing 5 years of investment.

Conclusion

A PPF account is not just a secure investment but also a tax-saving tool with multiple benefits. Ensure timely deposits to keep the account active and enjoy uninterrupted access to its features. Reactivating an inactive account is simple but involves arrears and penalties, so act promptly to avoid unnecessary charges.