Invest in these tax-saving schemes by March 31 to keep your accounts active

Depositing a minimum amount in some of your investment accounts annually is mandatory to keep them active so you must do so before March 31 each year. This is important for those with Public Provident Fund (PPF), National Pension System (NPS) and Sukanya Samriddhi Yojana (SSY) accounts as not depositing anything in these accounts in the whole financial year has penal consequences apart from the accounts becoming inactive.

You need to keep these accounts active since they come with tax benefits under Section 80C of the Income-tax Act, 1961. Even if you doesn't invest in them in this FY 2019-20, you need to invest a minimum amount to keep them active and avail of these benefits.

Therefore, make sure you deposit the requisite minimum amount in these schemes by March 31.

Scheme	Minimum Contribution	What happens if minimum amount is not invested	How to unfreeze and penalty
PPF	500	Account discontinue, withdrawal will not be allowed and no loans can be taken against it	Rs 500 for each unpaid year and Rs 50 as penalty for each year
NPS Tier-I	1000	Tier-I and Tier-II both get frozen	Unpaid minimum amount plus Rs 500. Penalty of Rs 100*
NPS Tier-II	Nil	no minimum amount requirement	Not applicable
Sukanya Samriddhi Yojana	250	Account becomes inactive	Rs 250 for each unpaid year and peanlty of Rs 50 for each year

*PFRDA has unfrozen all frozen accounts in 2016 without asking for penalty and unpaid amount

Here is a look at the minimum amount you need to invest in these schemes to keep them active and what happens if it is not done.

Public Provident Fund
The minimum annual contribution for PPF is Rs 500. The last date to make the contribution for this financial year is March 31, 2020, after which you will have to pay a penalty of Rs 50 for each year you fail to make the minimum contribution along with an arrear subscription of Rs 500 for each year.

In case the minimum contribution is not made in the FY, the account will be treated as discontinued. The subscriber in all such cases will not be entitled to the facility of obtaining a loan or making partial withdrawals unless the account is revived. A discontinued account can be revived before the end of its original maturity date. It cannot be revived after maturity nor can it be closed before maturity.

The subscriber will get back his amount only after the expiry of the maturity period of 15 years along with interest which will continue to be added each year (even in the discontinued account) on the balance at a rate fixed from time to time.

When the deposit is made using a local cheque or draft by the subscriber, the date of realisation of the amount will be treated as the date of deposit.

To earn the interest for the full month, PPF rules ask for payments to be made before the fifth of the month. If you had missed it for now, invest the minimum to keep the account active.

National Pension System
On opening an NPS account, the Tier- I becomes the primary account and has a lock-in period. The minimum annual (April-March) contribution for an NPS Tier-1 account to remain active had been reduced from Rs 6,000 to Rs 1,000 in 2016. A minimum contribution of Rs 1,000 is required from NPS Tier I account holders every fiscal. Not doing so for FY 2019-20 before FY 20 ends will make your account frozen.

To unfreeze, one has to make a minimum contribution of Rs 500 and Rs 100 as penalty and in addition the POP ( point of purchase) charges needs to be added to it. In 2016, Pension Fund Regulatory and Development Authority (PFRDA) had unfrozen all frozen accounts without asking for penalty and amount for unpaid years.

NPS Tier-II account is an optional account and there is no lock-in of funds. If the Tier-I account is frozen, then automatically the Tier II also gets frozen. The earlier requirement of maintaining a minimum balance of Rs 2,000 at the end of the financial year and contribution of at least Rs 250 per financial year in it had been waived off in 2016. For Tier II, there is no minimum contribution requirement for the financial year.

Keep a tab on these minimum limits as it can be changed at any point of time by the pension fund regulator.

Sukanya Samriddhi Yojana account
The SSY account may be opened with an initial deposit of Rs 250 (Earlier Rs 1,000) and thereafter any amount in multiples of Rs 50 (Earlier Rs 100) may be deposited subject to the condition that a minimum of Rs 250 (Earlier Rs 1,000) shall be deposited in a financial year.

An account under default may be regularised on payment of a penalty of Rs 50 per year along with the minimum specified amount for the year or years of default.

What you should do
Don't just make the bare minimum investment amount required in these schemes because you would have opened it with the purpose of meeting a certain goal. So, ideally, putting in the minimum amount won't help much in meeting long-term goals. It's better to link one's investment to a goal and invest the required amount accordingly.