PPF offers tax exemption below part 80C of the Income Tax Act, and its returns are not taxable, making it a superior funding choice in comparison with many others.Moreover, you’ll be able to go for a Loan Against PPF, which offers loans in opposition to your PPF steadiness at a aggressive rate of interest throughout monetary emergencies.
While your PPF account is energetic, you could have the flexibility to borrow cash in opposition to it or make partial withdrawals, regardless of its 15-year lock-in interval. However, once it reaches maturity, what options are available?
You have three alternate options to proceed once your PPF account matures,
a) Close the account and withdraw the whole proceeds.
b) Extend the account with out making contemporary deposits.
c) Extend the account with contemporary deposits.
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1. Close the account and withdraw whole proceeds
You can solely shut a PPF account after 15 years from the finish of the yr wherein you first subscribed to it. Once your account matures, you’ll be able to withdraw the whole corpus.
To do that, you have to submit a totally stuffed Form C at the financial institution department or put up workplace the place your PPF account is held. After processing, the corpus can be credited to your financial institution account, and the PPF account can be closed. In some banks, Form 2 is used as a substitute of Form C.
2. Extend the account with out contemporary deposits
After your PPF account matures, you could have the choice to increase it in five-year intervals indefinitely. During this prolonged interval, you are not required to make new deposits, however you’ll be able to nonetheless make partial withdrawals, topic to sure circumstances. However, extra contributions will not be accepted. The steadiness will proceed to earn curiosity for the subsequent 5 years. You’re allowed to make one partial withdrawal per fiscal yr throughout this time. Any quantity in the steadiness could be withdrawn once per fiscal yr by the subscriber. It’s essential to notice that if you happen to proceed the account with out deposits for greater than a yr, you can’t choose to renew contributions for a subsequent five-year block.
3. Extend the account with contemporary deposits
To proceed utilizing your PPF account and make new contributions after the finish of the maturity interval, you have to notify the Account Office earlier than the yr ends by finishing Form H. If you proceed to deposit with out submitting this manner, any additional deposits can be thought-about irregular, and no curiosity can be paid on them. Additionally, deposits made into PPF accounts after the 15-year window with out selecting to maintain the account open is not going to qualify for the tax advantages supplied by Section 80C of the Income Tax Act.
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Partial withdrawals throughout extension interval
If you select to increase your PPF account with out contributing, you’ll be able to withdraw any quantity from your steadiness once per fiscal yr, whereas nonetheless incomes curiosity on the remaining steadiness.
On the different hand, if you happen to resolve to increase the account with a contribution, you are allowed just one partial withdrawal throughout the extension interval. To do that, you have to submit a Form C utility. However, there is a situation: the whole withdrawals made throughout the five-year block interval can not exceed 60% of the credit score steadiness at the starting of the prolonged interval.
You have flexibility in the way you withdraw this quantity—you’ll be able to take all of it at once in a single yr or unfold it out over a number of years to swimsuit your wants. Similarly, throughout the subsequent five-year block interval, you’ll be able to withdraw as much as 60% of the whole quantity at credit score at the starting of that interval, however not more than once per yr. This withdrawal restrict applies at the begin of every five-year block extension.
