Thinking of reviving your dormant PPF account in order to shore up your savings? Here’s how you can go about it. 

The pandemic and its many repercussions in the form of job loss, pay cuts, and furloughs have compelled us to take a hard look at our savings and focus our efforts in shoring them up as much as possible. So it is no surprise that many of us, who are unsure of testing the market waters in these uncertain times, would want to stick to traditional instruments like PPF. If you’ve left your PPF account idle for some time and are thinking of reviving it, here’s how you can go about it.

PPF interest rates may have slashed to 7.10% today but tax benefits and stable returns still make it an attractive investment. So if you’re looking to park some more of your savings in some instrument, PPF is a good choice. However, if you already have a PPF account but have missed contributing to it for more than a year, chances are high that your account has become idle. It’s important to note that to keep your PPF account active, you need to make a contribution of at least Rs. 500 every year.

How To Revive Your Idle PPF Account

Follow the steps below to reactivate your idle PPF account:

1. Visit the bank branch or post office where you held your account, and submit a written request.
2. A penalty of Rs. 50 will be levied for every year that your account has remained dormant. You will need to pay this fee to initiate the reactivation process.
3. You will also need to pay a minimum deposit amount of Rs. 500 for each year that your account has been inactive.
4. Once the verification process is complete, your PPF account will be reactivated.

Additional Reading: Let’s take a look at the difference between PPF and NPS

Disadvantages Of An Idle PPF Account

Maintaining an idle PPF account means losing out on crucial benefits and facilities that subscribers with an active account are entitled to:

1. A subscriber with an active PPF account is eligible to take a loan of up to 25% of the balance amount available from the third to the sixth financial year after opening the account.
2. Subscribers with an active account can also access part of their savings in their PPF accounts by way of partial withdrawal after the completion of the seventh financial year since the account opening.
3. Deactivated accounts are also not eligible for premature closure.
4. Once your account is discontinued, you will only be able to withdraw the full amount only at maturity i.e. 15 years after the account is opened.
5.  While you can’t contribute to the account once it is discontinued, the amount already deposited will continue to earn interest until maturity. In order to withdraw the amount, you will need to pay the penalty accrued for the period of deactivation.
6. Another benefit that you will also be foregoing if you discontinue your contributions to PPF is the tax benefit. The PPF scheme has an EEE or ‘exempt, exempt, exempt’ status, which means that it provides subscribers with deduction benefits up to Rs. 1.5 lakh under Section 80C on deposits and tax-free interest and returns.

Additional Reading: Public Provident Fund – Features, Tax Benefits & How To Open A PPF Account

Besides the obvious tax benefits, PPF returns are government-backed and given their long tenure, it maximises the power of compounding, thereby building a sizeable corpus for your long-term goals like retirement, etc.

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