PPF Balance: Public Provident Fund (PPF) is a popular fixed income investment due to its sovereign guarantee and tax benefits. However, before investing in a PPF account, you should know that the rules governing it are strict and if they are not followed, the PPF account can be called irregular.
In fact, if a certain rule is not followed, the PPF account can be closed, contributions can be returned and interest payments can be stopped. In such a situation, here we are going to tell you about those four reasons through which PPF account can be closed.
Opening more than one PPF account
As per PPF rules, you are allowed to open only one account in one name. Also, if you have a PPF account with a bank, you cannot open an account with a post office. Also, if the PPF account is opened in the post office, then the PPF account cannot be opened in the bank. While opening a PPF account on behalf of your minor child, it should be opened by either the father or the mother; Both the parents cannot open separate accounts for the same minor.
Contribution of Rs 1.5 lakh in a year:
Anyone who contributes more than Rs 1.5 lakh in a financial year should contribute a minimum amount of Rs 500 to his PPF account. The maximum amount allowed in a financial year is Rs 1.5 lakh. Rs 1.50 lakh will include the amount deposited in his own account and in the account opened on behalf of the minor.
Contributions of more than Rs 1.5 lakh made during the financial year will be treated as irregular membership. The excess amount will neither earn interest nor be eligible for tax benefits under Section 80C of the Income Tax Act, 1961. Apart from this, the contribution amount of more than Rs 1.5 lakh will be returned to the account holder without any interest through post office.
Joint PPF Account
You cannot open a joint PPF account. If it is opened in joint name, the post office/bank can close these irregular accounts.
Extension of Account with Contribution
The PPF account can be extended indefinitely after the expiry of 15 years. But if someone continues to invest during the extension without informing the post office, it may be irregular. If you want to extend the account and also want to continue with the new deposit, you have to inform the post office in writing one year before the expiry by filling Form H.
If anyone continues to make deposits without submitting this form, all new deposits will be canceled and the account will be treated as irregular. Also, no interest will be given on it. The benefit of section 80C will not be available on deposits made in PPF account without exercising the option to continue the account after the expiry of 15 years.
