PPF or Public Provident account is chased for its different benefits pertaining to high interest, EEE status when it comes to taxation aspect such as tax free interest payments but at the same it, the investment calls for some rules that need to be adhered to, which if deviated from can classify your account as the irregular PPF account.
Elaborating on the 'EEE' status of PPF we mean that the investment is exempt from taxation when it comes to making investment in the investment option, interest earnings on it and maturity proceeds are all tax free in the hands of the investor.
But in order to ensure that your PPF account remains regular or continues to earn you interest, you should factor in these important points:
1. Annual contribution should be of a minimum Rs. 500: In order to maintain your PPF account as a regular one you need to deposit an annual minimum sum of Rs. 500 towards it, failing which in any of the financial year your account will automatically turn irregular.
2. Do not deposit beyond the allowed limit of Rs. 1.5 lakh in a year : It is also to be noted that as the account qualifies for tax deduction under section 80C for a maximum of Rs. 1.5 lakh in a year, any sum over this allowed limit will not be earning interest and instead would be treated as irregular subscriptions.
3. Opening several PPF accounts: Only one PPF account can be opened in a bank or post office. In case of two accounts of the same person, the second PPF account will be deemed as irregular and will not fetch any returns to the account holder. Parents can however open a PPF account on behalf of their minor child.
4. Opening PPF account in joint name is also not allowed: Though a nominee can be appointed while opening the PPF account, the rules per se do not allow opening PPF account in joint names.
5. Contributions after PPF account maturity need to be notified to the post office or bank: As in an otherwise scenario, the investments made after the maturity period of 15 years will not fetch any return plus will not provide you income tax benefits under section 80C.