PPF Account Extension Rules: Although there are many means of investment these days, PPF is still considered a very good scheme.
This government guaranteed scheme coming in EEE category can add a good amount of funds in the long term, and also saves tax in three ways. Investment in PPF, interest received on it and the amount received on maturity, all three are completely tax free.
A minimum of Rs 500 to Rs 1,50,000 can be invested annually in PPF. Currently, PPF is getting an interest rate of 7.1%. This scheme matures in 15 years, but if you want to take advantage of it further, you can extend it in blocks of 5 years each. Know here how many times PPF can be extended and what needs to be done to get an extension?
Know the rules of extension
In case of PPF extension, the investor has two options – first, account extension with contribution and second, account extension without investment. If you do not withdraw the amount after the maturity of 15 years, then your account gets extended automatically. The advantage of this is that whatever amount is deposited in your PPF account, you keep getting interest as per the calculation of PPF and tax exemption also remains applicable. Apart from this, you can withdraw any amount from this account anytime. If you want, you can even withdraw the entire amount. In this, you get the facility of FD and savings account.
Also Read: Cash Deposit Limit: How much cash can I deposit in my bank account? Know these important rules, otherwise….
When does extension happen in 5-5 year blocks?
If you want to deposit a lot of money through PPF and want to extend the account with contribution, then in this case the account is extended in blocks of 5-5 years. You can get the account extended as many times as you need. But to extend the account with contribution, you will have to submit an application to the bank or post office where the account is.
You will have to submit this application before the completion of 1 year from the date of maturity and a form will have to be filled for extension. The form will be submitted in the same post office / bank branch where the PPF account has been opened. If you are unable to submit this form on time, then you will not be able to contribute to the account.
Remember these rules related to extensions
- The first condition is that PPF extension can be done only by citizens residing in India. Indian citizens who have taken citizenship of another country are not allowed to open a PPF account or extend an account if they already have one.
- For PPF extension, first of all you have to give an application to the bank or post office where you have an account. You have to give this application before the completion of 1 year from the date of maturity.
- If the term of the PPF account is extended for 5 years on your application, then you will have to deposit at least Rs 500 per year. If you do not deposit this minimum amount, your account will be closed. To restart it, you will have to pay a penalty of Rs 50 per year.
- After choosing the option of PPF Extension, you can withdraw money from your account only once a year. The withdrawal amount can be up to 60 percent of the amount you had till the maturity date.
