A PPF (Public Provident Fund) account can be continued after maturity, with or without making further contributions. Financial planners say that a PPF account holder should extend the account if there is no immediate requirement of funds. Despite the lowering of interest rates in recent times, PPF or Public Provident Fund is considered one of the best investment options for accumulating savings for the long term. PPF account comes with a maturity period of 15 years. (Also read: How to open PPF account in SBI | ICICI Bank)
Currently, the interest rate on small savings schemes such as PPF is revised on a quarterly basis. With effect from April 1, 2018, PPF account fetches an interest rate of 7.6 per cent per annum.
A PPF subscriber whose account is about to mature can choose to close the account and withdraw the entire proceeds.
The other option would be to opt for extension of the PPF account, which can be extended for one or more blocks of five years each, on application by the subscriber.
(Also read: Are Partial Withdrawals From PPF Account Taxable? All You Need To Know)
PPF Account Extension
You can extend your Public Provident Fund (PPF) account on maturity by a block period of five years. You have two options: with or without further contributions. So the account holder can retain the account after maturity for any period even without making any further deposits. A PPF deposit continues to earn interest till the account is closed.
Partial withdrawals are possible from PPF accounts during the extended period.
(Also read: Why You Must Deposit Money In PPF Accounts Before Or On 5th Of Every Month)
If a PPF account holder opts for the with-contribution mode during the extended period, he or she can withdraw up to 60 per cent of the amount held in the account at the beginning of the extended period. But only one withdrawal is permitted per year. The balance continues to earn interest.
On the other hand, if the PPF account holder chooses the without-contribution mode, any amount can withdrawn. But only one withdrawal is allowed per year.
PPF maturity proceeds are tax-free as PPF deposits fall under the EEE (exempt, exempt, exempt) tax category, which means an investor is not liable to pay tax at all three levels - investment, earning and withdrawal.
Tax experts say that PPF partial withdrawals also don't attract any tax. "All payments from PPF shall be exempt from tax under Section 10 (11) and partial withdrawals or premature closure are not exceptions," says Naveen Wadhwa, DGM at Taxmann.com.
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