What to do when your Public Provident Fund (PPF) account matures.
The Public Provident Fund (PPF) is a popular savings option due to its competitive interest rates and tax breaks, particularly for small depositors. A PPF account allows you to deposit anything from Rs 500 to Rs 1.5 lakh per year.
The PPF provides tax exemptions under Section 80C of the Income Tax Act, and the returns are not taxed. This makes it a better investment alternative than others. You can also borrow against your PPF balance at a reduced interest rate in an emergency.
Even though the PPF account has a 15-year lock-in period, you can borrow from it or make partial withdrawals. But what are your alternatives after it has reached maturity?
When your PPF account matures, you have three options:
- Close the account and withdraw the entire amount.
- Extend the account without making any new deposits.
- Extend the account with fresh deposits.
- Close the account and withdraw the entire amount.
You can close your PPF account after 15 years from the end of the year you opened it. When your account matures, you can withdraw the entire balance by sending Form C (or Form 2 in some banks) to the bank or post office where it is held. The funds will be credited to your bank account, while the PPF account will be terminated.
- Extend the account without further deposits.
You can extend your PPF account for an additional 5 years without making any new deposits. During this period, your balance will continue to accrue interest, and you may make partial withdrawals; but, no new contributions will be accepted. You can remove any amount from your balance once each fiscal year.
If you do not make any deposits for more than a year, you will be unable to restart donations for the next five years.
- Extend the account with fresh deposits.
If you want to continue depositing money into your PPF account after it matures, you must tell the Account Office and complete Form H before the end of the year. If you deposit money without submitting this form, your funds will not accrue interest and will not be eligible for tax breaks under Section 80C.
- Partial Withdrawals During the Extension Period.
- Without deposits: You can withdraw any amount once every fiscal year and still receive interest on the remaining balance.
- With deposits: You are only allowed one partial withdrawal during the extended period. Total withdrawals within the 5-year block cannot exceed 60% of the credit balance at the start of the extended term.
You can withdraw the 60% amount all at once or over several years. Each consecutive 5-year block allows you to take up to 60% of the entire sum at the start of the period.
PPF Calculator link:
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PPF Extension Guidelines: How to Maximize Benefits After Maturity
For those who have invested in the Public Provident Fund (PPF) and want to continue enjoying its benefits after it matures, you can extend your account. It's important to understand the rules for extending your PPF account.
The PPF is a popular investment option backed by the government, offering guaranteed interest. Open to all Indian citizens, it’s a long-term investment that matures after 15 years, allowing your money to grow through compounding. Many investors prefer it because it helps build a good savings fund, even though there are other investment options available.
Currently, PPF offers a 7.1% interest rate, which is attractive for people who want to keep their money invested beyond the 15 years. If this sounds like you, it’s important to know the rules for extending your PPF.
Two Extension Options:
When it comes to PPF extensions, you have two choices:
1. Extend with contributions
2. Extend without contributions
Each extension lasts for 5 years, and there’s no limit to how many times you can extend your account.
Extending with Contributions:
If you want to keep adding money to your PPF after the 15-year maturity period, you need to apply at your bank or post office. This must be done within one year of your PPF maturing by filling out an extension form. If you miss this deadline, you won’t be allowed to deposit more into your account.
Extending without Contributions:
If you don’t want to make more deposits but still want to earn interest on your PPF balance, you don’t need to notify the bank or post office. By simply not withdrawing your money after the 15-year period, the extension automatically begins.
The main benefit of this option is that your balance continues to earn interest, and you still get tax benefits. Plus, you can withdraw money whenever you need, giving you flexibility similar to a fixed deposit or savings account.
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