PPF Account on Maturity – What options do you have?
Public Provident Fund (PPF) is one of the safest investment options to accumulate money for long term of 15 years. Many investors use PPF to accumulate money required for kids’ education, daughter’s marriage and even for retirement purpose. PPF has 15 years tenure. If you are a PPF account holder, you might wonder what you can do on PPF maturity. In this article we would discuss about various options available for PPF account holders on Maturity.
Also Read: Sukanya Samriddhi Account Vs PPF – Which is better?
Public Provident Fund (PPF) – Key Features
You can skip this section if you are already aware about PPF.
Public Provident Fund (PPF) is a fixed income saving scheme and has sovereign guarantee i.e., backed by Govt of India. Hence many investors believe this is one of the safe investment plans in India.
PPF interest rate is reset every quarter by Ministry of Finance.
Current PPF interest rate is 7.1% per annum.
PPF enjoys EEE Status (Exempt, Exempt and Exempt) i.e., Investment in PPF qualifies for exemption up to ₹ 1.5 Lakhs u/s 80c, Interest earned on PPF is tax free, maturity amount is tax free.
PPF tenure is 15 years.
PPF Account on Maturity – What options do you have?
Here are the options available for PPF holder on maturity of 15 years.
#1 – Close the PPF account on maturity and withdraw the total amount along with interest.
#2 – Extend PPF account for another 5 years and continue to invest
#3 – Extend PPF account for another 5 years and do not invest.
Let us discuss these details in detail.
#1 – Close PPF account and withdraw entire amount
On maturity of 15 years, PPF account holders can close the PPF account and withdraw the total amount in PPF along with interest amount.
You can visit bank / post office wherever you have PPF and submit PPF Form C application for withdrawal. Some banks are offering online closure too.
PPF account closure should be done within 1 year from the maturity date.
PPF maturity proceeds would be credited directly to your savings account. No separate cheque or cash would be given to you.
#2 – Extend PPF account for another 5 years and continue to invest
On maturity, many investors might want to extend it. Investors have an option to extend it for another 5 years block period.
Investors can extend for any number of times after that (5-year block period applies).
If PPF account holders want to extend PPF account with contribution, they need to submit Form-H (Application for continuance of account under Public Provident Fund Scheme, 1968 beyond 15 years). They need to continue to make contributions every year (minimum contribution required) in their PPF account up to ₹ 1.5 Lakhs.
#3 – Extend PPF account for another 5 years and do not invest.
On maturity, some investors might want to extend it, but do not wish to contribute. In such case they don’t need to do anything. The PPF automatically gets extended for another 5 years and at the same time no investment can be done into it. PPF investors would continue to get interest on their PPF account with existing balances and they would also continue to enjoy EEE status.
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Which option should you opt?
This would depend on your need.
If you have achieved your financial goals and do not wish to invest any more in PPF, you can withdraw entire amount.
If you are in the process of achieving your goals or looking for tax savings for few more years, you can extend PPF account and continue to invest in PPF every year.
If you are in the process of achieving your goals, but not looking for tax savings (or using other options for tax savings), you can continue with PPF account and make no investments.
The above are few sample scenarios and not comprehensive.
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Hello Suresh, What is the maximum contribution for this current year. There were talks to increase the limit but not sure what is the official approval is.
Thanks
Nothing changed. Its Rs 1.5 Lacs per financial year.
Is there an option to get interest amount on Option 2 or Option 3 like MIS or on specific frequency? Request to guide on this
Interest on PPF is always credited yearly (irrespective of options) and paid along with maturity amount
Thank you so much for the guidance
Sir,
There is a tax provision introduced in last budget wherein PF contribution beyond 2.5 lacs becomes taxable. If a salaried person has compulsory employer contribution + compulsary Employee contribution + Voluntary PF + PPF more than 2.5 lacs per annun, then whether the PPF contribution is Exempt or becomes taxable? Pls advice
Sridhar
after 25years can we withdraw money each year equivalent to the interest earn during the year?
Hello Bondre, There is nothing like withdrawing only interest. You can withdraw upto 60% of the eligible amount after 15 years extension. You can take a call and withdraw a portion once in a year (e.g. total investment is 20 lakhs, eligible amount is 12 lakhs (60%), but interest is 1.4 lakhs (assuming 7%) and you can withdraw only 1.4 lakhs)
Thank you Sir for the valuable tip on PPF.
Thanks a lot sir, but can we extend it again after 5 years? Or is it always a max investment period of 20 years only?
Magesh, You can extend any number of times after 15 years. once, twice, thrice etc.,
Thx a lot sir, appreciated!
Extending PPF is a really great option. Since PPF is a fixed income instrument one should keep the proceeds from it safe by investing in a similar fund keeping the asset allocation in place.
Dear Sir
I have Multiple Query:
1.Like this How many time PPF can be Extended for 5 Year. It is One time or Multiple time.
2. We need details EPF / Once person left job in india ( Gone abroad) and How many years it yield Interest without closing the EPF account ? What are the possible option to maintain the EPF account without closing the EPF to get the Interest accumulation?
3. Other than PPF what are the other schemes provide EEE ?
Hello Veera
1) We can extend for any number of times
2) Are you referring EPF or PPF? If EPF only, you can continue EPF or withdraw by submitting EPF withdrawl online. Eligible amount is paid back to you after providing valid documents online
3) EEE options – PPF, EPF (Certain T&C on max limit as per recent guidelines), ULIPs, Insurance Savings plans, Sukanya Samridhi account,
Hi Suresh,
Just wanted to add a line here, although many people would be aware of it, just wanted to mention that when PPF is matured after 15 years, the maturity process can only be done after the end of the current financial year (Apr 1st onwards). So if anyone has any plans based on the actual date of the maturity, this info will be useful.
Thanks,
Thanks Ganesh. Your comment is useful
What is the withdrawal procedure of ppf within 15 years and above or how can I withdraw money from PPF from the initial stage at requirments
Subir, The eligible amount of withdrawal depends on the number of years in PPF.
Within 15 years – From 7th year onwards – 50% of the total amount preceding the 4th year of withdrawal is eligible as partial withdrawal
After 15 years – 60% of the amount as of the financial year beginning is eligible for withdrawal (with or without extension)
Do I have an option to withdraw funds if I opt for extension after 15 years is completed? Lets assume on 17th year (assuming i continued for 5 years) from date of inception of PPF account I am in urgency of fund and I want to withdraw it. Please respond for 2nd (Continue with investment) and 3rd scenario (continue with no Investment) .
After PPF is extended for 15 years for 5 years, the PPF withdrawal limit is set to 60% of the total available amount at the beginning of the financial year.
e.g. on 17th year beginning, balance is 1 lakh, 60,000 is eligible to be withdrawn
e.g. on 18th year beginning, balance is 2 lakh, 120,000 is eligible to be withdrawn
The above guideline applies for both (with or without investment extension)