Public Provident Fund (PPF) is a very popular investment option for older investors who prefer risk-free investment. Investing in PPF guarantees the investor to get the principal as well as interest. PPF is currently providing interest at the rate of 7.9% for the October to December quarter. PPF has a lock in period of 15 years. On investing in it, you can avail tax benefits of up to Rs 1.5 lakh a year under Section 80C of the Income Tax Act. EEE tax benefits are also available on investing in PPE. In this, you get tax benefits under Section 80C along with interest earned and the amount withdrawn after maturity is also tax free.
PPF has many advantages, but the problem is when people have more than one PPF account. Because you are only allowed to have a PPF account. But some people have more than one PPF account. These accounts can be in bank and post office. If you have two PPF accounts, what should you do? This information is being given through this article.
Give declaration while opening a PPF account
While opening a PPF account you should give a declaration. Through this manifesto you should tell that you do not have any other PPF account. However, you can open a PPF account in the name of your minor child. If you have two children, one of the parents can open a PPF account in the name of the first child, while one of the parents, who has not opened a PPF account in the first name, .
The second account becomes irregular
If you have more than one PPF account in your name, you should get rid of the other account otherwise the other account becomes an irregular account. In this case you will not get any interest on the balance of the second account. You have to regularize the PPF account. Keep in mind that you cannot close another PPF account till the maturity period of 15 years. You have to keep it active by depositing just Rs 500 per year in PPF account, which is the minimum amount.
What to do if you have two PPF accounts?
- If you have two PPF accounts, you will have to convert both of them into a single account. If you do not do this, the second account will become irregular and you will not get interest on the amount deposited in it.
- For this you should contact the Department of Economic Affairs, Ministry of Finance. You must write a letter to the Under Secretary-NS Branch MOF (DEA).
- While writing about this to the DEA, you will have to provide all the details related to these accounts along with the details of both accounts.
- After the amalgamation process is complete, if your total contribution to the account exceeds Rs 1.5 lakh in a year, then the excess amount is returned to your bank account without interest.
- Deposits above Rs 1.5 lakh are treated as irregular amounts. This amount does not get tax benefit under Section 80C.
How to transfer a PPF account?
- If your transfer is to a new city or place, you do not need to open a new PPF account. You can transfer your PPF account from one branch of the bank to another.
- All you have to do is submit an application to your current branch. Through this application you will have to request to transfer the account to the bank branch of your new place.
- It is better to get your passbook updated before the account is transferred. This gives you information about the last deposit and the interest earned on it.
- The account details and related documents are verified after the submission of the application.
- After the verification process is completed, the money deposited in your current PPF account is transferred to the new branch of the bank.
- When the new branch of the bank receives your application and documents, then the process of opening a new PPF account starts. Meaning transfer the old account to the new branch and start working. Your old PPF account is started in a new branch.
- For KYC in the new branch of the bank, you have to submit your personal identity documents. Transfer process of PPF account is like opening a new bank account.
- After completion of the process, the new PPF account becomes active. In the new branch you get a new passbook. In this passbook, your accumulated balance appears as the initial balance.