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Business News/ Money / Personal Finance/  What happens to your PPF account post its maturity? We explain
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What happens to your PPF account post its maturity? We explain

You invest in a PPF account for 15 years. However, the investment amount attains maturity after 16 years from the date on which the account has been opened. Recurring extensions of five years, with or without contributions, is also allowed, thus, increasing the scope for continued investments.

PPF account is of minimum 15 years though you can avail of the maturity amount not before 16 years.Premium
PPF account is of minimum 15 years though you can avail of the maturity amount not before 16 years.

Investors looking for fixed returns over a prolonged tenure prefer putting their money in their Public Provident Fund (PPF) accounts. The idea behind putting money in this investment option is to benefit from the compounding effect over the period.

However, not many people know that you can withdraw money from the PPF account not in the 15th year but only upon the completion of 15 years, thus, underlining how it takes at least 16 years to benefit from PPF investment.

Many people are confused regarding the tenure of PPF investments not realizing that the determination of tenure is based on the period from April 01 to March 31 of a financial year.

If you opened your PPF account on August 10, 2022, you cannot seek redemption of the maturity amount before March 31, 2038. This is because 15 years would be counted from April 01, 2023, ending on March 31, 2038.

Deciding whether to extend or redeem your PPF account?

When the PPF account matures, you again have myriad options for utilising the maturity amount. One way is that you seek redemption of the maturity amount. But, did you know that you can withdraw the maturity amount in instalments too? However, you cannot exercise this option for more than a year. You can take out a chunk of the amount leaving the rest to earn interest on the same.

If your PPF account has matured but you have not closed it, you will continue to earn interest as long as you keep it. However, further contributions to these accounts will not be allowed. Also, you can either continue earning from your account or close the earlier one to start a new one and invest in the same.

But, what if you wish to stay invested? One way is that you can think of getting this account extended for another five years. You must then apply to intimate the bank or post office (depending on where your account is) of your intention regarding your PPF account extension. You can then decide whether to contribute or discontinue your PPF investments throughout the forthcoming five-year batch. However, the contribution must not exceed Rs 1,50,000 every year.

If you do not close the account and choose not to intimate the bank of your intent, the bank will automatically extend the account for another five years. This means that the option will be automatically activated if the accountholder fails to inform about his intent within a year from the date of maturity of the PPF account.

There is no limit to how long you wish to extend, which means that you can apply for another five-year extension after the completion of five years post the maturity date. But, if the account is automatically extended, you cannot make any fresh contributions to the account. Also, you cannot seek any change in the option once the extension period has commenced. However, you can withdraw any amount from the account while earning interest on the balance amount, though you can exercise this option only once a year.

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How to apply for a PPF account extension?

Continuing with your PPF investments makes sense considering how investors benefit from the Exempt-Exempt-Exempt (EEE) option. When the maturity of your PPF account is due, you must submit Form H, to the post office or bank where you have your PPF account. Remember, you must submit your application within a year of the application deadline. The intimation is necessary. This is because if you do not select this option and continue to deposit normally, you will not be eligible to earn interest on the amount deposited nor will be eligible for benefits under Section 80C of the Income Tax Act, 1961.

Also, if your PPF account is extended automatically, i.e., sans any intimation to the bank or post office, you can withdraw up to Rs 60 lakhs during the extension period. You can withdraw the amount in a single withdrawal within the first year of extension or in small instalments over the extension period. However, only one withdrawal is permitted during a year.

Once this extension period is over, you can opt for the next five-year block or allow the account to be extended with or without contribution, depending on how you perceive your financial future.

Allocating a part of your earnings to a PPF account is a great way to invest in a risk-free investment option while also availing of Section 80C tax benefits. The maturity amount in a PPF account corresponding to different maturity periods and contributions can be seen in the table below.

Yearly Investment

(in Rs)

Interest Rate 

(in %)

Investment Tenure 

(in years)

Invested Amount 

(in Rs)

Total Interest 

(in Rs)

Maturity Value 

(in Rs)

1,50,0007.11522,50,00018,18,20940,68,209
Extension of the PPF account for another five years sans contribution

Yearly Investment

(in Rs)

Interest Rate

(in %)

Investment Tenure

(in years)

Invested Amount

(in Rs)

Total Interest

(in Rs)

Maturity Value

(in Rs)

07.1540,68,20917,27,72657,95,935
Extension of the PPF account for another five years with yearly contributions

Yearly Investment

(in Rs)

Interest Rate

(in %)

Investment Tenure Extended for Five Years

(in years)

Invested Amount 

(in Rs)

Total Interest 

(in Rs)

Maturity Value 

(in Rs)

1,50,0007.12030,00,00036,58,28866,58,288

Whether you wish to redeem your PPF investments or continue to extend the same after every five years depends on your financial goals. First, assess how much would be enough to free you from financial worries before deciding on your asset allocation and how long you want to stay invested.

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Published: 08 Apr 2023, 10:34 AM IST
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