PPF Account Maturity: PPF account is earning 7.1% interest this quarter. Let us know what options you have after your PPF account matures?
PPF Account Maturity: PPF is a very popular scheme among middle class investors. By investing in it, you get great interest as well as tax benefits. You can deposit a minimum of Rs 500 or a maximum of Rs 1.5 lakh every year in a PPF account. In this small saving scheme run by the government, you get tax exemption under section 80C of the Income Tax Act.
You have three types of options
The return on investment made in PPF is not taxable. For these reasons, it is better than other investment options. Apart from this, you can also choose the option of Loan Against PPF against PPF balance at the time of your need. Despite the lock-in period of 15 years while the PPF account is active, you also have the facility to take a loan on it or make partial withdrawal. On maturity of PPF account, you have three types of options, let’s know which ones?
1.) Close the account and withdraw the entire amount.
2.) Extend the account without depositing any money.
Close the account and withdraw the entire amount
After the maturity of the PPF account, you have the option to close it and withdraw the entire amount. You can close your PPF account only after 15 years from the end of the financial year in which you opened it. Once your account matures, you can withdraw the entire amount. To do this, you need to submit a completed Form C at the branch or post office where you have your PPF account. After this process, your money will be deposited in your bank account and the PPF account will be closed. Some banks use Form-2 instead of Form C.
Continue the account without making any deposit
After the maturity of the PPF account, you have the option to extend it for an unlimited period of five years each. During this extended period, you are not required to make any new deposit. But you can still make partial withdrawals under certain conditions. However, additional deposits will not be accepted. The remaining amount will continue to earn interest for the next five years. You are allowed one partial withdrawal every financial year during this period. The account holder can withdraw any amount from the remaining amount once in every financial year. It is important to note that if you continue for more than a year without depositing any amount, you cannot choose to resume investment for the subsequent block of five years.
Continue the account by depositing money
You can continue your PPF account even after maturity. Along with this, you can also make new investments in it. To keep the account active, you will have to inform the bank by filling Form H before the end of the year. If you continue depositing without submitting this form, the money deposited by you will not be considered regular and you will not get any kind of interest on it. Also, if deposits are made in a PPF account after a period of 15 years without you choosing to continue the account, they will not be eligible for tax benefits provided under Section 80C of the Income Tax Act.
If you choose to extend your PPF account without any deposits, you can withdraw any amount from your balance once in a financial year along with interest on the balance amount. On the other hand, if you decide to extend the account with deposits, you are allowed a partial withdrawal only once during the extension period. To do so, you will have to submit Form C. There is also a condition that the total withdrawal cannot exceed 60% of the deposit amount at the beginning of the extension period during the five-year period.
