What is the minimum contribution criteria in PPF, NPS and SSY schemes to keep them active?

Certain tax saving schemes may require a minimum investment into the account every year. Government Schemes like Public Provident Fund (PPF), Sukanya Samridhi Yojana (SSY), National Pension Scheme (NPS), etc., require minimum contributions every year. Not depositing the minimum amount in such schemes may deactivate the accounts. Let us see the minimum necessary contribution required in such schemes every year and the consequences for not depositing the same.

Public Provident Fund (PPF)

Minimum contribution

Those who have opened a PPF account must deposit a minimum contribution of Rs 500 in the account every financial year. If you have not deposited the minimum contribution in the current financial year, deposit the amount before 31st March 2022.

Failure to deposit minimum contribution

If you fail to make the minimum deposit into the PPF account, it will be discontinued. You will not be eligible to obtain a loan or make partial withdrawals unless the account is revived. 

Also, you can claim the amount deposited only after the expiry of the maturity period of 15 years, along with interest. You cannot close the PPF account before the maturity period.

Also, if you want to extend the account after the maturity period, you can do so only if the account is revived within the subscription period of 15 years.

If the account is discontinued, you need to pay at least Rs 500 along with the penalty of Rs 50 for each unpaid year. However, it should be noted that you can revive the discontinued account only during the 15 years of maturity.

National Pension Scheme (NPS)

Minimum contribution

As per the rules set up by PFRDA for Tier-I NPS account holders, the account shall remain active only if a minimum contribution of Rs 1,000 (previously Rs 6,000) is made in a financial year. For Tier-II NPS account holders, the minimum contribution required is Rs 250 per financial year. 

Failure to deposit minimum contribution to NPS account

If minimum contribution is not received, the NPS account is categorized as ‘frozen’ and activated upon contributing to the account. To revive the frozen NPS account, you will have to pay a penalty of Rs 100 along with minimum contributions for the period the account was frozen. For an offline NPS account, you need to approach the Point-of-Presence (POP) and pay appropriate charges for unfreezing the account.

Sukanya Samriddhi Yojana (SSY)

Minimum contribution

To keep the SSY account active, it must deposit a minimum of Rs 250 every year in Sukanya Samriddhi Yojana (SSY) account.

Failure to deposit minimum contribution to SSY account

If the minimum required amount is not deposited within the end of each financial year, the account will become dormant. 

To activate the same, one needs to deposit the minimum contributions of Rs 250 and a penalty of Rs 50 year for each year of default. However, the account should be regularised before the completion of 15 years from opening the account.

If not regularised, the deposits in the dormant SSY account will only earn the regular savings interest rates.

For any clarifications/feedback on the topic, don’t hesitate to contact the writer at namita.shah@cleartax.in.