PPF, NPS, SSY: Here's why you should make minimum deposit in these tax savers before March 31

Many tax-saving schemes require the investor to make a minimum deposit every financial year to ensure that the account remains active. Some of the schemes that require a minimum deposit every financial year are Public Provident Fund (PPF), National Pension System (NPS) and Sukanya Samriddhi Yojana (SSY). If you have not deposited any money into these accounts for the current financial year, then make sure you do it on or before March 31, 2022, or else your account will become inactive.

Do note that from FY 2021-22, an individual can opt for either the old/existing tax regime and avail existing tax exemptions and deductions. Or opt for the new, concessional income tax regime and forgo most tax exemptions and deductions. However, even if you opt for the new tax regime, it is important to ensure that you have deposited the minimum contribution required to keep the account active.

Here is a look at the minimum amount you need to invest in tax-saving schemes to keep them active and what happens if you do not make the minimum contribution. (Do keep a tab on the minimum limits as it can be changed by regulators from time to time.)

• PPF

Minimum amount to be deposited: The minimum annual contribution for the PPF account in a financial year is Rs 500 and the last date to make this contribution for the current financial year is March 31, 2022.

What happens if minimum contribution is not made: If you fail to make the contribution by this date, then 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.

Further, if a minimum contribution is not made in the financial year, the PPF account will be treated as discontinued. A discontinued PPF account 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. Added to this, a discontinued account cannot be extended.

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

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

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*
Sukanya Samriddhi Account Scheme	250	Account becomes inactive	Rs 250 for each unpaid year and penalty of Rs 50 for each year

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

• NPS

Minimum amount to be deposited: For Tier-I NPS account holders, it is mandatory to make a minimum contribution of Rs 1,000 in a financial year to ensure that the account remains active, as per current rules.

What happens if a minimum contribution is not made: If the minimum contribution is not made to the NPS Tier-I account, then the account will become dormant. To revive the dormant NPS account, you will have to pay a penalty of Rs 100 every year along with minimum contributions. Point-of-Presence (POP) charges will also be added for unfreezing the NPS account.

If one also has a Tier II NPS account (where no lock-in of funds is required), then along with the Tier-I account getting frozen, the Tier-II account will also automatically get frozen. This will happen even though Tier II has no minimum contribution requirements.

• Sukanya Samriddhi Account Scheme

Minimum amount to be deposited: To keep the Sukanya Samriddhi Account active, a minimum deposit of Rs 250 is required to be deposited in a financial year.

What happens if minimum contribution is not made: If the minimum deposit is not made in a financial year, then it will be treated as a defaulted account.

A defaulted account can be regularised before the completion of 15 years from the date of opening of the account of the SSY account. To regularise the account, you will be required to pay a minimum contribution of Rs 250, along with a penalty of Rs 50 for each defaulted year.