Due to its sovereign guarantee and tax advantages, the Public Provident Fund is a well-liked fixed-income investment. However, before making an investment in a PPF account, you should be aware that there are severe regulations that must be observed or the account may be deemed irregular. In fact, the PPF account may be terminated, contributions refunded, and interest payments halted if a specific rule is broken. Here, we will outline the four justifications for closing a PPF account in such a circumstance.
Establishing several PPF accounts
You are only permitted to open one account in one name under PPF regulations. Additionally, you cannot open an account with a post office if you have a PPF account with a bank. Additionally, once a PPF account has been opened in a post office, it cannot be opened in a bank. The father or the mother should open the PPF account on behalf of the minor child; both parents cannot open separate accounts for the same minor.
Annual contribution of Rs. 1.5 lakh
Anyone who makes more than Rs 1.5 lakh in a financial year should fund their PPF account with at least Rs 500. The most that can be spent in one financial year is Rs. 1.5 lakh. He would deposit Rs. 1,50,000 into both his personal account and the one he made in the minor’s name. Contributions made during the fiscal year that exceed Rs 1.5 lakh would be considered irregular membership. The extra sum will not be subject to interest payments or Section 80C of the Income Tax Act of 1961 tax benefits. In addition, the post office would restore the contribution amount of more than Rs 1.5 lakh to the account holder without charging interest.
PPF Account Joint
A joint PPF account cannot be created. The post office or bank may close these erroneous accounts if they were opened in joint names.
Account Extension with Contribution
After the initial 15 years have passed, the PPF account may be continued indefinitely. However, it can be abnormal if someone keeps making investments during the extension without telling the post office. You must fill out Form H one year prior to the account expiring if you want to continue with the new deposit while also extending the account. Any further deposits made without submitting this form will result in the cancellation of all previous deposits and the treatment of the account as irregular. No interest will also be paid on it. Deposits made into a PPF account without exercising the option to keep the account open after the first 15-year period are not eligible for the benefits of section 80C.
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