End of March is end of tax saving season as well. So, those who invest in such instruments like Public Provident Fund (PPF), National Pension System or NPS scheme and Sukanya Samriddhi Yojana (SSY), they are advised to check whether they have deposited minimum amount in it or not. Failing to deposit minimum amount in one financial year would lead to deactivation of their PPF, NPS and SSY account. Though, one can reopen these small saving schemes that allows saving on income tax outgo, but it would incur penalty. so, it’s better to check whether the investor has deposited minimum annual amount in one’s PPF, NPS or SSY account or not.
Here we list out the minimum annual deposit required in PPF, NPS or SSY account and continue investing without any interruption:
1] PPF account: As per the Public Provident Fund or PPF account rules, one has to deposit minimum ₹500 in single financial year to keep one’s provident fund account in active mode. Failing to deposit minimum annual deposit amount would lead to inactivation of PPF account. However, one can re-active one’s PPF account paying ₹50 penalty for each year of default.
Speaking on PPF account rule; Harsh Roongta, Head at Fee Only Investment Advisers said, “A PPF account holder has to deposit minimum ₹500 in single financial year to continue investing in one’s tax saving provident fund account. If a PPF account holder fails to deposit at least ₹500 in one’s PPF account in one financial year, then in that case his or her PPF account will become inactive. Once the PPF account become inactive, then an investor won’t be able to continue investing in it till it gets it re-activated again by depositing ₹500 minimum annual deposit and ₹50 penalty for each year of minimum deposit default. Remember, one has to reactivate one’s PPF account within 15 years of PPF maturity period and an inactive PPF account can’t be extended beyond 15 years.”
2] NPS account: Harsh Roongta of Fee Only Investment Advisers said that one needs to deposit at least ₹1000 in single financial year in Tier-1 NPS account. Minimum deposit rule doesn’t get applicable on NPS Tier-2 account.
Speaking on NPS account rules; SEBI registered tax and investment experts Jitendra Solanki said, “Failing to deposit minimum ₹1,000 in Tier-1 NPS account leads to dormancy of one’s NPS account. As per the NPS scheme rules, one will be able to re-open one’s NPS account after depositing ₹1,000 minimum deposit and a penalty of ₹100 for each year of minimum deposit default.”
3] SSY account: SEBI registered expert Jitendra Solanki said that SSY account holders are required to deposit at least ₹250 in single financial year. In case, a SSY account holder fails to deposit ₹250 in one financial year, then the SSY account will be freezed. To get it re-opened, one will have to pay ₹250 minimum annual deposit amount and ₹50 penalty for each year of minimum deposit default. Solanki said that one can re-open one’s SSY account before the girl child attains 15 years otherwise the amount will get freezed and it would be credited to one’s attached bank account after the maturity period.
Hence, small saving schemes like PPF, NPS or SSY account holders are advised to check it once whether they have deposited the minimum annual amount in their respective PPF, NPS and SSY accounts or not.
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