How to deal with your PPF account on maturity

You can get the maturity proceeds transferred to your savings account by submitting an application to the bank or post office in the prescribed format with details of PPF and savings accounts.

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A form prescribed for extension must be filled and submitted to the post office within one year of maturity of the account.
A Public Provident Fund (PPF) account has a maturity period of 15 years and investments up to Rs 1.5 lakh every financial year are applicable for tax deduction.

The PPF maturity amount is also taxfree. So, it is recommended that one weighs the options carefully while dealing with a maturing PPF account.

Three choices

  • At the time of maturity, you have three choices:
  • Closure of the account
  • Extension for a block of 5 years
  • Continue the account without any new contribution

Close the account
If an account holder needs the funds immediately, he can choose this option. One can get the maturity proceeds transferred to his savings account by submitting an application to the bank or post office in the prescribed format with details of PPF and savings accounts. The original passbook and a cancelled cheque must be submitted along with the signed form.
What you can do with your PPF account after it matures
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A Public Provident Fund (PPF) account allows individuals to invest up to Rs 1.5 lakh each year and also provides a tax deduction under Section 80C of the Income Tax Act. An account-holder must deposit a minimum of Rs 500 every financial year to his/her PPF account.

The account has a validity of 15 years, also known as its maturity period. Besides the investment into PPF, the maturity amount is tax-free too. The options you have with regards to your PPF account, once it matures- you can withdraw the entire balance and close the account or extend it for five years with or without making further contributions. The extension in blocks of five years can be done indefinitely. Here are these choices in more detail.

A Public Provident Fund (PPF) account allows individuals to invest up to Rs 1.5 lakh each year and also provides a tax deduction under Section 80C of the Income Tax Act. An account-holder must deposi..
Read More

This is an option one can use for immediate cash needs or a financial crunch. You can get the maturity proceeds transferred to your savings account by submitting an application to the bank or post office in the prescribed format with details of PPF and savings accounts. The original passbook and a cancelled cheque must be submitted along with the signed form.

This is an option one can use for immediate cash needs or a financial crunch. You can get the maturity proceeds transferred to your savings account by submitting an application to the bank or post of..
Read More

If you do not need the funds immediately, if you want to continue the account and contribute to it, you can use PPF as a tax-saving tool and continue investing in it. You need to apply for extension by submitting an application to the Post Office or bank before one year of maturity ends. Extensions are provided for a block of five years at one go and can be taken as many times as one wishes to, ie. indefinitely.

If you do not need the funds immediately, if you want to continue the account and contribute to it, you can use PPF as a tax-saving tool and continue investing in it. You need to apply for extension ..
Read More

This is the default option in case of maturity of PPF account. So if you do not inform the bank or Post Office, your account automatically gets extended. Although you cannot make any more contributions, the balance amount keeps earning tax-free interest and you can make only one withdrawal per financial year. No paperwork is needed for this option.

This is the default option in case of maturity of PPF account. So if you do not inform the bank or Post Office, your account automatically gets extended. Although you cannot make any more contributio..
Read More
  • Maturity date of PPF account is reckoned as 15 years from the end of the financial year in which the account was opened. Hence the maturity date will always fall in the month of April.
  • Withdrawals are tax free and do not affect tax liability of the individual.
Maturity date of PPF account is reckoned as 15 years from the end of the financial year in which the account was opened. Hence the maturity date will always fall in the month of April.Withdrawals are..
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Extend the account
If the funds are not needed immediately, an account holder can choose to use PPF as a tax saving tool and continue investing in the account by applying for extension. Provided for a block of fi ve years, extensions can be taken as many times as one wishes to. A form prescribed for extension must be fi lled and submitted to the post offi ce within one year of maturity of the account.

Continue the account
If the account holder does not need the funds immediately and wants it to earn tax-free interest, without making any further contributions, he/she still has the option to withdraw the funds subject to one withdrawal each fi nancial year of any amount. This is a default option and does not need any paperwork.

Point to note
  • Maturity date of PPF account is reckoned as 15 years from the end of the financial year in which the account was opened. Hence the maturity date will always fall in the month of April.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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