New Delhi: Public Provident Fund (PPF) is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal. Though PPF has a lock-in period of 15 years, you can make extension in a block of 5 years for tenures upto 20, 25 and 30 years.
However, for specific reasons, mentioned below, your PPF account can also be discontinued. We have also discussed how you can revive a discontinued PPF account.
Here is how your PPF account shall become discontinued
In any financial year, if you have not made minimum deposit of Rs 500, then your PPF account shall become discontinued. It may also be noted that loan or withdrawal facility is not available on discontinued PPF accounts.
Here is how to revive a discontinued PPF account
Discontinued account can be revived by the depositor before maturity of the account. The account holder must deposit minimum subscription fee i.e. Rs 500 plus Rs 50 as default fee for each defaulted year.
The total deposit in a year, shall be inclusive of deposits made in respect of years of default of previous financial years.
The PPF Scheme, introduced by the National Savings Organization in 1968 was aimed at making small savings a lucrative investment option.
PPF currently offers an interest rate of 7.1 per cent.
A minimum of Rs 500 and a maximum of Rs 1.5 lakh per annum can be deposited every year in a PPF account at present. Deposits can be done maximum in 12 transactions. However, you must note that if you deposit more than Rs1.5 lakh in your PPF account per annum, the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act.