After completing 15 years, account holders have 2 options: they can either extend the PPF account with fresh contributions or extend the PPF account with no fresh contributions.
PPF has remained as one-of-its-kind investment over the past several years. Tax-free income, income tax benefit on the contributions made and the highest safety of the amount invested have made PPF a popular choice even amongst the salaried individuals.
A PPF account matures on the expiry of 15 years from the end of the year in which the first subscription was made into the PPF account, irrespective of which date the account was opened. For instance, if you have opened a PPF account on January 23, 2005, the 15 years will get completed on March 31, 2020. After this date, you are eligible to withdraw the entire balance.
However, if you do not want to withdraw the entire balance, you can extend the account also. After the completion of 15 years, according to PPF rules, account holders can extend their accounts indefinitely in a block of 5 years. During the extended period, account holders can still make partial withdrawals, without making any contribution.
Hence, after completing 15 years, account holders have 2 options: they can either extend the PPF account with fresh contributions or extend the PPF account with no fresh contributions.
If you extend your PPF account with fresh contributions:
To extend the PPF account with fresh contributions, account holders need to intimate the post office/ bank by submitting Form H (Now Form 4). If you do not submit this form, the deposits you make into this account will be treated as irregular and no interest will be paid on fresh contributions. Also, no tax benefit under section 80C will be available to you if the form is not submitted and yet contributions are made. However, note that Form H/4 needs to be submitted at the time of each extension if fresh contributions are to be made. The minimum contribution required is Rs 500 in a year.
To make partial withdrawals: During the extended period, account holders can withdraw a maximum of 60 per cent of the account balance.
If you extend your PPF account with no fresh contributions:
To continue your PPF account without making any fresh contributions, account holders do not have to intimate the post office by submitting any form. Know that your account balance will continue to earn interest which the government declares.
To make partial withdrawals: With no fresh contributions made during the extended period, account holders can make any amount of partial withdrawal. However, note that in a year account holders can make only one such partial withdrawal.
Keep in mind, once you complete 15 years, you have to intimate the post office or bank within 1 year whether you want to continue with deposits or not. After one year, account holders will have to either withdraw the full balance or extend their accounts without fresh contributions.
What should you do?
To extend or not to extend the PPF account after maturity totally depends on the account holder. However, experts suggest that considering things like the safety of the deposited amount and tax-free interest, account holders could extend the account if they do not want to use the fund for any other purpose. Especially, people who are yet to retire or will be retiring in a few years should extend the PPF account and thereby continue reaping the benefit of the tax-free investment.