Tax Saving Schemes: We are approaching the end of the financial year 2021-22. The alarm of the end of the financial year has been sounded, from the employed to the businessmen, they are busy in fixing their books and accounts. Most of us are checking whether we have made the minimum investment required to continue with some savings and pension schemes. Every year minimum investment is necessary in Public Provident Fund-PPF, Sukanya Samriddhi Yojana (SSY) and National Pension Scheme ie National Savings Scheme (NPS).
With the help of these schemes, you can collect a huge fund by making small savings and can also get exemption in income tax. If you have not deposited money in these accounts in this financial year, then your account may be closed. To keep your account active, you must put the minimum amount in it by 31st March.
If you do not deposit money in PPF, NPS and Sukanya account on time, then the account can be closed. Penalty will have to be paid for restarting the account. A fresh KYC may be required to reactivate the account. Therefore, to avoid all these troubles, by March 31, you must deposit the minimum amount in these accounts.
With the help of Personal Finance Advisor, here is an attempt to explain why it is necessary to make regular investments in certain savings and pension accounts and what are the disadvantages if you are not able to continue investing in them. How to reactivate accounts in case of default?
Public Provident Fund- PPF
To keep the Public Provident Fund (PPF) account active, it is necessary to invest at least Rs 500 every year. If you do not do this your account will be closed. However, there is no maximum investment limit in this account. But you will get the benefit of tax exemption only on investment up to Rs 1.5 in a year.
You can take a loan against PPF amount after three and five years only if your account is active. If your account is not active then neither you can take loan nor withdraw money. Interest is paid on the outstanding balance in the closed account till maturity. Default accounts cannot be activated after maturity and if your account is closed at the time of maturity, you cannot carry forward the account for the next five years.
National Pension Scheme (NPS)
In the National Pension System i.e. National Savings Scheme, at least one thousand rupees have to be deposited in a year. There is no requirement of Tier 2 minimum investment. But the account defaults if the minimum amount is not deposited in Tier-1. You will have to pay a fine of Rs 100 to get it started again.
Tier 2 is a voluntary account. It is also called investment account. No tax benefit is available in this account.
Sukanya Samriddhi Yojana (SSY)
To keep the Sukanya Samriddhi account running, it is necessary to deposit at least Rs 250 every year. If this minimum amount is not deposited then the account gets closed. If the money is not credited, the account will be considered as defaulted and the interest facilities on it will be closed. There will be a penalty of Rs 50 for restarting this account.
Failure to regularize the account will not affect the interest and the balance will continue to accrue till the maturity of 21 years. In Sukanya Samriddhi Yojana, money is deposited only for 15 years, before which the default account can be activated.
Tags: Employee provident fund, pension scheme, Provident Fund, Sukanya Samriddhi Scheme, Tax saving
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