PPF has been one of the most preferred savings options over the last several years, mostly because of its income tax benefit on the contributions made, along with tax-free income. It also offers the highest safety of the amount invested, because of which PPF has always been a popular choice even amongst the salaried individuals.
PFF accounts mature after 15 years from the end of the year in which the first subscription was made, irrespective of which date the account was opened. For example, if an account has been opened on February 15, 2006, the 15 years will get completed on March 31, 2021. After this date, the account holder will be eligible to withdraw the entire balance anytime after April 1, 2021.
Having said that, without withdrawing the entire balance, account holders can also extend their accounts indefinitely by a block of 5 years. During the extended period, partial withdrawals can also be made without making any contributions. Hence, after the maturity of the PPF account, (completing 15 years) account holders can either extend the PPF account with fresh contributions or extend the account with no fresh contributions. Industry experts say it is better to know the PPF rules before making any withdrawals on maturity.
Extending PPF account with fresh contributions
By submitting the Form H, account holders need to intimate the post office or the bank, that they wish to continue their PPF account with fresh contributions. If the From H is not submitted by the account holder, the PPF account will be treated as irregular and no interest will be paid on the fresh contributions. Additionally, if the form is not submitted and yet contributions are made no tax benefit under section 80C will be available for the account holder.
To make partial withdrawals: During the extended period, account holders can withdraw a maximum of 60 per cent of their account balance at the start of each extended period. Account-holders can make this partial withdrawal anytime but only once during each year of the extended period. Account-holders need Form C that can be used by SBI’s PPF account holders for withdrawal.
Extending PPF account with no fresh contributions
For this account, holders do not have to inform the post office by submitting any form. The account balance will continue to earn interest rates as per what the government declares. After completing 15 years, the account holder has to inform the post office or bank within 1 year whether he/she plans to continue with deposits or not. After 1-year, account holders will have to either withdraw the full balance or extend their accounts without fresh contributions.
Even though extending or not extending the PPF account after maturity totally depends on the account holder, experts suggest one should considering things like the safety of the deposited amount, and tax-free interest that the PPF account offers.
