Last date of tax-saving investment: March 31 is the last date to ensure a timely deposit to continue with these old tax-saving investments
Some of the programs that require a minimum deposit each fiscal year are PPF, NPS, and Sukanya Samriddhi Yojana (SSY). If you haven’t deposited money into these accounts for the current fiscal year, be sure to do so on March 31, 2021, otherwise your account will become inactive.
Before you read on, keep in mind that from fiscal year 2020-21, an individual can continue with the old / existing tax regime and benefit from existing tax exemptions and deductions. Or opt for the new concessional tax regime with no existing tax exemptions or deductions. Keep in mind that even if you opt for the new tax regime, it is important to make sure that you have deposited a minimum contribution to keep the account active.
Here’s a look at the minimum amount you need to invest in these programs to keep them active and what happens if it isn’t.
The minimum annual contribution for the PPF account is Rs 500 in a financial year. The last date to make the contribution for this fiscal year is March 31, 2021, after which you will have to pay a penalty of Rs 50 for each year that you fail to make the minimum contribution as well as a contribution arrears of Rs 500 for every year .
In the event that the minimum contribution is not paid during the financial year, the account will be considered closed. The PPF account holder in all such cases will not be entitled to the option of obtaining a loan or making partial withdrawals unless the account is reactivated. An abandoned account can be reactivated before the end of its original maturity date. It cannot be relaunched after expiration or closed before expiration.
The subscriber will only recover the amount after the expiration of the 15-year maturity period as well as interest which will continue to be added each year (even in the closed account) on the balance at a rate fixed from time to time. other.
When the deposit is made by local check or by means of a draft by the subscriber, the date of realization of the amount will be considered as the date of deposit.
|Scheme||Minimum contribution||What happens if the minimum amount is not invested||How to unfreeze and sanction|
|PPF||500||Closing of the account, the withdrawal will not be authorized and no loan can be contracted against it||Rs 500 for each unpaid year and Rs 50 as a penalty for each year|
|NPS Level I||1000||Levels I and II are both frozen||Minimum unpaid amount plus Rs 500. Penalty of Rs 100 *|
|Sukanya Samriddhi Account Program||250||The account becomes inactive||Rs 250 for each unpaid year and penalty of Rs 50 for each year|
* PFRDA released all frozen accounts in 2016 without asking for a penalty and unpaid amount
If you have opened an NPS Level I account, it is mandatory to make a minimum contribution to the NPS account each fiscal year. Under current rules, the NPS Level I requires a minimum contribution of Rs 1000 in a financial year to ensure the account remains active.
If the minimum contribution is not made to the NPS Tier-I account, the account will go dormant. To reactivate the NPS account, you will need to pay a penalty of Rs 100 per year as well as minimum contributions each year. Point of presence (POP) fees will also be added to reactivate the NPS account.
NPS also offers another account where there is no blocking of funds. If the level I account is frozen, then automatically the level II is also frozen even if the level II does not have minimum contribution requirements.
Keep an eye out for these minimum limits as they can be changed by the pension fund regulator.
Sukanya Samriddhi Account Program
To keep the Sukanya Samriddhi account active, a minimum deposit of Rs 250 is required during a fiscal year. If the minimum deposit is not made during a fiscal year, then the account will be treated as a defaulted account.
An account in default can be regularized before the expiration of a period of 15 years from the date of opening of the account. To regularize the account, you will have to pay a minimum contribution of Rs 250, as well as a penalty of Rs 50 for each overdue year.
What you should do
Don’t just make the bare minimum of investment required in these plans as it won’t help much in achieving long term goals. It is better to tie your investment to a goal and invest the required amount accordingly.