The catch with PPF investment is that, even if the account holder fails to make the yearly deposit and the account becomes inactive, it still continues to earn interest.
Public Provident Fund (PPF) is one of the most popular investments in India and is used for creating long term savings. Investments with PPF come with a tenure of 15 years and the depositor is required to make a deposit of minimum Rs 500 in a financial year to keep the account active. Failing to make the deposits in time leads to the account being termed as inactive. Experts say, with such a long tenure many people fail to keep depositing the minimum required amount, because of which many accounts have been made inactive.
PPF is a central government scheme, hence, it offers guaranteed return which is higher than the return on other low-risk products. With PPF an investor can invest up to Rs 1.50 lakh in their account is a financial year, and get income tax deduction under Section 80C of the Income Tax Act 1961.
However, the catch with PPF investment is that, even if the account holder fails to make the yearly deposit and the account becomes inactive, it still continues to earn interest. For policyholders with inactive accounts, even though they still continue to earn interest, they will not be able to avail of other benefits like a loan through their PPF account. Additionally, there are ways to revive your inactive PPF account.
If you are one of them with an inactive PPF account, here is how you can reactivate the account;
Sent a written application, to the place where the account was opened. For the revival of the inactive PPF account, all account holders need to submit a written request asking to reactivate their account from where it was initially opened. Account-holders can either write to the bank or the post office branch from where they have opened the account. Keep in mind, the application for account revival has to be made any time during the 15 year period of the account.
To revive the inactive PPF account, depositors will have to make a minimum deposit along with the penalty for nonpayments. For each financial year of the period when the account was inactive, account holders are required to deposit a minimum of Rs 500. This will also include a penalty for each financial year in which the account was inactive of Rs 50. A cheque needs to be submitted for this to the branch along with the written application.
After submitting the written application to the bank or the post office, they will scrutinize the application to find out if the PPF account is within its tenure of 15 year period or has elapsed. On successful verification, if the account is within the tenure the PPF account will get reinstated. Keep in mind that on crossing the tenure of 15-years where the account has elapsed, it can no longer be revived, and the account holder can get hold of his/her the account’s maturity proceeds by paying the penalty, Rs 50 for each financial year the account was inactive.