How can you revive a dormant PPF account?

Public Provident Fund or PPF, a retirement-focused investment instrument, comes with EEE (Exempt-Exempt-Exempt) tax status. The maturity amount and the overall interest earned during the period of investment are tax-free in PPF investment.

PPF has a lock-in period of 15 years. It is said that periodic investment in PPF for a long-term can do the trick with the power of compounding.

How can you combine post office MIS with recurring deposit and maximise returns?

Longer the money stays invested, the quicker it grows.

In a PPF account, an investor needs to deposit a minimum of Rs 500 in a financial year to keep the account active. Failure to do so would result in the account being labeled as a dormant account.

There are chances when investors may forget investing in their PPF, especially if they invest in a lot of other avenues. This results in the account becoming dormant, according to experts.

Deactivation of PPF account doesn’t mean investors will lose their money but they can no longer make contributions to the account. Additionally, investors may lose certain benefits which they can avail as a PPF subscriber.

"A dormant account continues to accrue interest for the deposited amounts. However, facilities such as loan against investments made would not be eligible if the account is dormant," explains Raghvendra Nath, managing director, Ladderup Wealth Management.

In this scenario, investors should revive their account as early as possible.

For revival of dormant PPF account, investors need to write a written request to the bank or post office where the account is held for activation of the account. Secondly, they are required to pay a sum of Rs 500 as deposit and Rs 50 as penalty for each year of inactivity.

Nath explains this with an example.

"Let’s assume -- the account is inactive for the last two years. In this case, investor will need to pay Rs 500 x 2 = Rs 1,000 as deposit and Rs 50 x 2 = Rs 100 as penalty," he opines.