You must have heard about Public Provident Fund having 15 years of maturity. But you probably have no idea about its withdrawal rules and policies. That’s why you have landed here!
Hoping you already know about PPF scheme, we are moving directly to the main crux. You may check out Public Provident Fund Guide, in case you want further details!
Closure Of PPF Account
The maturity tenure for PPF account is 15 financial years. It means, if you have opened the account in August 2015, you can close it on 31st March 2031. Once maturity period is completed, you can withdraw entire amount compounded in the account over 15 years.
PPF authorities have strict restrictions regarding withdrawal. You are not allowed to make a premature withdrawal unless money is needed for medical urgency or higher education. In such cases, the government has provided the relaxation. But still, your account has to be 5 years older for premature withdrawal.
Coming to the main point, you have three closure options once maturity period is finished. You have following three choices:
- Withdraw total PPF balance
- Extension of PPF accounts without any further contribution
- Extension of PPF accounts with further contribution
Withdraw Total PPF Balance
After the completion of 15 years maturity, you have freedom to make the withdrawal. You can get entire PF balance along with compounded interest. You won’t face any problem for this step. Just take your passbook to the respective bank or post office and request withdrawal. You need to submit a Form C with essential details and documents for withdrawal.
Extension Of PPF Account Without Any Further Contribution
Sometimes, people don’t need to withdraw PPF balance. The reason can be anything. In this situation, you can extend the life PPF account that does not require any further contribution. For this option, you don’t need to fill any form. Just sit there when maturity period is finished. If you don’t make a move to withdrawal, your account will go in this mode by default. By mode, I meant PPF account will act as the saving account. You can withdraw money when needed. An extended PPF account will have following characteristics:
- You can make the withdrawal anytime you want.
- The withdrawal is allowed only for once in a year.
- The amount left in the account will earn the interest.
- To close the account, you need to make a complete withdrawal.
- You cannot make any further deposits.
- The account will have no privileges under section 80C.
Extension Of PPF Account With Further Contribution
This is the most outstanding feature of PPF account. If you can maintain good cash flow movement, you should extend the PPF account with further deposits. For this, you have to make intimation within one year of maturity. Otherwise, you cannot avail this opportunity.
After maturity, you can extend the PPF account for further 5 years. The Form H is mandatory for the extension request. Once 5 years are done, you may make another extension request again with the Form H!
Talking about features, it pretty much acts like normal PPF account:
- A minimum deposit of Rs. 500 per year is compulsory.
- The account still claims the tax deduction.
- Before 5 years, you cannot ask for closure.
- For once in a year, you can make withdrawal as per need.
- You cannot make withdrawal more than 60% of total PPF balance.
All three withdrawal options are beneficial as per needs. For instance, you may use the first option if you need money right after the retirement. The second option is great if you are financially strong and don’t want entire PPF balance. In this way, you can earn interest and make a withdrawal when you need it! The third option is an ideal situation for people with financial stability. As, this option comes with interest, tax benefits, and withdrawal relaxation!
Hopefully, you get the answer you were looking for! In case you have something valuable to share, please connect with us via comments below!