Any deposits beyond the limit will not earn interest or qualify for tax benefits, which can spoil the entire financial plan.
Multiple PPF accounts may lead to financial loss: Public Provident Fund (PPF) is considered to be the most reliable option for safe and tax-free investment. An individual can have only one PPF account in his name, be it in any bank or post office. If more than one PPF account is found in the name of an individual, it is considered “duplicate” or irregular. In such cases, one account is usually kept valid and the other is closed.
Why do people open more accounts?
Many people open a second account, hoping to invest more. The maximum investment limit in PPF is Rs 1.5 lakh per annum.This limit is applicable across all accounts and not per account separately. Additionally, any deposits beyond the limit will not earn interest or qualify for tax benefits, which can spoil the entire financial plan.
However, one relaxation in the rules is that parents can open a separate PPF account in the name of their child, but even here the total investment (Parent+Child) should not exceed Rs 1.5 lakh per annum. If you need to change bank or facility, instead of opening a new account, the old PPF account can be transferred. Doing so is considered the correct way of doing things according to the rules.
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