Home Featured Why You Must Reactivate Your Dormant PPF Account? Here’s How To Do It

Why You Must Reactivate Your Dormant PPF Account? Here’s How To Do It

by Shatakshi Gupta

Public Provident Fund is one of the best investment tools. If you are looking for long term investment then Public Provident Fund (PPF) is a good option. One can invest in it for as low as Rs 500. You can invest a maximum of Rs 1.5 lakh in this. It is one of the most subscribed tax saving investment schemes in India. Talking about tax benefits, it gives tax exemption under section 80C on investments. Unlike other tax saving schemes, you don’t need to pay tax even on the interest income generated on maturity. However, many people discontinue the scheme and later realize that it was not a prudent step. If your Public Provident Fund (PPF) account has also been closed, then you should also re-enable it as soon as possible. Let’s see how you can do this.

Why account becomes inactive?

 Every year the account holder has to deposit a minimum of Rs 500 in the PPF account. It is important to note here that you have to invest continuously for 15 consecutive years. In an inactive account, the beneficiary will not able to get benefits through PPF.  Therefore, it is important that you continue with your investment.  Many times people are not able to put even the minimum amount in the account due to some reason. This break in continuity becomes the cause of account closure.

Why you must reactivate the account?

Also read: Know About The National Pension Scheme

Apart from tax benefits and high return rate, loan can be also be raised against the amount deposited in the PPF account. But if your PPF account has become inactive, then you will not be able to get this benefit either. Apart from that, if the account holder wants to open a new PPF account other than the closed PPF account, then he will not be allowed. No one person can have two PPF accounts. So must restart your old account.

How to reactivate your dormant PPF account?

The procedure of restarting the PPF account is very simple.

  • To re-activate the PPF account, you have to visit the bank or post office where you had opened the account.
  • There, you will have to fill a form to get the account activated again.
  • After filling out the form, you have to pay the arrears. This means that for every year in which you have not paid the contribution you will have to make a minimum payment at the rate of Rs 500 per year.
  • Along with this payment, you will also have to pay a penalty of Rs 50 per year. For eg., if your PPF account is closed for 5 years. So you have to pay minimum arrears of Rs 2500 for four years. Along with this, you will have to deposit a penalty of Rs 250.
  •  After submitting the form and payment of arrears and penalties, your PPF account will be activated again.

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