PPF Account Interest Rate: During the first quarter of the financial year, the government had announced to give 7.1 percent interest on PPF account. Let us know what are your options after the PPF account matures?
PPF Account Maturity: PPF is a very popular scheme among middle class investors. By investing in this, you not only get excellent interest but also get tax benefits. You can deposit a minimum of Rs 500 or a maximum of Rs 1.5 lakh every year in the PPF account. In this small savings scheme run by the government, you get tax exemption under Section 80C of the Income Tax Act.
You have three options
The returns received on investments made in PPF are not taxable. For these reasons it is better than other investment options. Apart from this, you can also opt for Loan Against PPF balance at the time of your need. Despite the lock-in period of 15 years, while the PPF account is active, you also have the facility to take a loan from it or make partial withdrawals. You have three types of options on maturity of PPF account, let us know which ones?
1.) Close the account and withdraw all the money.
2.) Extend the account without depositing any money.
Close the account and withdraw all the money
After maturity of PPF account, you have the option to close it and withdraw the entire amount. You can close your PPF account only after 15 years from the end of the financial year of opening your PPF account. Once your account matures, you can withdraw the entire money. To do this, you will have to submit the completed Form C in the branch or post office where you have your PPF account. After this process, your money will be deposited in your bank account and the PPF account will be closed. Some banks use Form-2 instead of Form C.
Continue account without depositing anything
After the maturity of the PPF account, you have the option to extend it for an unlimited period of five years each. During this extended period, you are not required to make a fresh deposit. But you can still make partial withdrawal under certain conditions. However, additional deposits will not be accepted. Interest will continue on the remaining amount for the next five years. You are allowed one partial withdrawal every financial year during this period. Any amount of the remaining money can be withdrawn by the account holder once in every financial year. It is important to note that if you continue for more than a year without depositing any amount, you cannot choose to restart investing for subsequent five-year blocks.
Continue by depositing money into your account
You can continue your PPF account even after maturity. Along with this, you can also make new investment in it. To keep the account active, you will have to inform the bank by filling Form H before the end of the year. If you continue to deposit without submitting this form, then the money deposited by you will not be considered regular and you will not get any interest on it. Additionally, if deposits are made in the PPF account after a period of 15 years without opting to keep the account active, they will not be eligible for the tax benefits provided under Section 80C of the Income Tax Act.
If you choose to extend your PPF account without depositing any money, you can withdraw any money from your balance once in a financial year by earning interest on the remaining amount. On the other hand, if you decide to extend the account with deposits, you are allowed to make partial withdrawal only once during the extension period. To do this you will have to submit Form C. There is also a condition in this that at the beginning of the extension period, more than 60% of the total amount deposited cannot be withdrawn during five years.
