Extending the PPF Account After Maturity
1. Close the Account and Withdraw the Entire Proceeds:
The first choice upon PPF maturity is to close the account and withdraw the accumulated corpus. However, this can be executed only after the 15-year lock-in period from the end of the subscription year. To do so, you must complete Form C (or Form 2 in certain banks) and submit it at your bank branch or post office where the PPF account is held. Once the form is processed, the accumulated amount will be credited to your bank account, and the PPF account will be terminated.
2. Extend the Account without Fresh Deposits:
A compelling alternative upon maturity is to extend the PPF account without making fresh deposits. This extension can be done in five-year increments, which can be repeated indefinitely. During this extension period, you are not mandated to make new deposits. The balance continues to earn interest as per prevailing rates, ensuring your wealth keeps growing. You can make partial withdrawals during this period, subject to specific conditions.
One partial withdrawal is permitted per fiscal year for accounts that have been extended without new deposits. While the interest continues to accrue on the remaining balance, this approach provides flexibility in accessing a portion of your funds when needed. Notably, if the account is not funded with deposits for over a year, the option to resume contributing for a five-year block term becomes unavailable.
3. Extend the Account with Contributions:
If you wish to continue contributing to your PPF account after maturity, you must communicate your intent by submitting Form H before the end of the year. Additional deposits will be considered irregular without this formal notification, and no interest will be paid. Contributions made beyond the 15-year window without explicitly opting to keep the account open will not qualify for the tax benefits under Section 80C of the Income Tax Act.
Under this option, you can make fresh contributions while enjoying the benefits of compounded interest. However, the frequency of withdrawals is more restricted. Only one partial withdrawal is permitted during the extension period, except that the total withdrawals in a five-year block period do not exceed 60% of the credit balance at the start.
Strategic Considerations
Choosing the right approach depends on your financial goals and circumstances. If immediate liquidity is a priority, closing the account may be a suitable option. However, extending the account – either with or without contributions – offers the advantage of compounded returns for continued growth. It’s essential to evaluate your financial needs, emergency funds, and investment horizon before deciding.
Conclusion
As your PPF account matures, a range of options opens to ensure your hard-earned savings continue working for you. The decision to close, extend without deposits, or extend with contributions should be rooted in your financial goals and risk tolerance. While the PPF’s allure remains consistent – combining tax benefits, attractive interest rates, and security – your choice of navigating the account post-maturity can shape your financial future.
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