A PPF account holder has three choices after the account reaches maturity. Continue reading to find out what those three options are and which one is best for your investment portfolio.
Public Provident Fund, or PPF, is one of the most well-liked savings plans in India for amassing a retirement fund. It’s one of the most beneficial savings options for all taxpayers. Section 80C allows for tax deductions on PPF investments up to ₹1.5 lakh and the amount received at maturity is tax-exempted. Additionally, the interest is tax-free.
PPF is one of the most sought-after investment strategies due to its low minimum investment requirements and assured risk-free profits. The lock-in period for PPF accounts is 15 years.
The fact that it can be extended at the end of the maturity period is unknown to many investors.
After 15 years, financial experts suggest you renew your PPF account in blocks of five years if you don’t need the money right away.
In this article, we will discuss everything you need to know about extending or renewing your PPF account maturity. In other words, when it reaches maturity.
What Choices Are Available When a PPF Account Reaches Maturity?
The three alternatives that investors have at the end of the maturity period are listed below.
1. Close the Account and make a Complete Withdrawal
A PPF account matures 15 financial years from the end of the year it was opened. Suppose you created a PPF account in May 2005. The final day of March 2006 is regarded as the opening year. The PPF account matures on April 1, 2021, 15 years after it was first opened in 2006.
Withdrawals: Inform the post office (or bank) where the account is held if you want to close it. Your linked bank account receives a credit for the entire amount of the proceeds, including principal and interest.
2. Extend the Account Without Adding Any New Funds
After PPF account maturity, you have the choice to keep your PPF account open without adding any new funds. The money in the account in this case will continue to accrue interest until the day you close it. In five-year increments, extensions are permitted indefinitely. You may extend the account an unlimited number of times.
However, keep in mind that once you select this option, even if you want to, you cannot make any more contributions to your account.
Partial Withdrawals: Every financial year, you may only make one withdrawal. Your ability to withdraw money is unrestricted. Interest is still being earned on the account’s remaining balance.
3. Add New Contributions To the Account to Extend it
After maturity, you may choose to keep funding your PPF account with additional contributions. To use this option, you must, however, submit Form H to the post office (or bank) within a year of the maturity date.
All deposits made after maturity are regarded as irregular if Form H is not submitted but you can still make deposits to the PPF account. These deposits have no interest accruing on them and are not deductible from taxes in accordance with ITA Section 80C.
Partial Withdrawals: If you chose an extension with a contribution, you are only permitted one partial withdrawal throughout the extension’s five-year duration.
The maximum withdrawal is limited to 60% of the balance in your account at the start of the extension period. This sum may be withdrawn in a single installment or several installments over five years.
You can get in touch with Vakilsearch for more details, and their expert legal advisors will answer all of your questions.
When and Why Should You Think About Extending the PPF Account?
- If you don’t require the money right away when the account matures, you can choose to prolong it. The money in the account will continue to accrue interest in this way for the following five years.
- It is preferable to extend the account if your retirement age is far off. Suppose you started a PPF account when you were 30 years old. At age 45, it gets matured. If you want the money to help you when you retire at age 60, you can extend it an additional three times.
To renew the account with contributions, submit Form H. In this way, you can keep increasing your corpus and benefit from lower taxes.
Let’s now look at how to renew your account when it reaches maturity.
How Can I Extend my PPF Account When it Reaches Maturity?
Let’s examine two methods for extending a PPF account: adding fresh funds and not making any more investments.
If you don’t shut the PPF account within a year of its maturity, it will automatically be extended for another five years without any additional contributions.
How Can I Extend My PPF Account Without Making Any New Contributions?
There is nothing you need to do if you want to keep your PPF account open without making any additional contributions. If you don’t take the cash out within a year of maturity, this is the default option, and your account will extend for the next give
How Can I Add Fresh Contributions to My PPF Account?
Within one year of the account’s maturity, you must deliver Form H to the post office (or bank) where your account is active.
Did you know?
- A guardian can open a Public Provident Fund account on behalf of a minor.
- ₹1,50,000 is the maximum amount that can be claimed as a tax exemption under PPF.
FAQs
My PPF Account Has Already Been Extended Once. Can I Get Another Extension?
Yes. Your account can be extended continuously for five years. You are free to keep extending the term as you like.
When Should a PPF Account Be Renewed?
After 15 years have passed since the account's start date, you can choose whether to extend or not.
Can My PPF Account Be Transferred From One Bank or Post Office to Another?
Yes. You must first submit a transfer application at the post office or bank where your account is active to enable the transfer. The current bank or post office processes the application and delivers the necessary paperwork to the new branch along with a check for the account's remaining balance after processing the application.
Conclusion
Your funds will continue to accrue interest if you extend the PPF account after it matures. You have the option to renew the funds unless you have a significant expense scheduled for maturity. You can keep receiving rewards from your PPF account maturity even after investing for 15 years by using any of the options listed above.
If you’re a working professional, figuring out PPF returns can occasionally be a hassle. To get this issue resolved, get in touch with Vakilsearch. With decades of experience, their legal professionals can help you with any legal matter.
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