What should you do with your PPF account after 15 years?

Investors have a variety of investment options to choose from today to build their investment portfolio. Unlike the available options for the older generations, the options today can be a mix of traditional and dynamic investment options that allow the investors the benefits of higher returns at the same time the safety of manageable risks. The traditional investment options are still quite popular though even among the younger generation as they provide reasonably assured returns at a lower risk as compared to options like mutual funds or equity investment. 

PPF is one such evergreen investment option that provides assured returns at minimal risks as well as tax savings along the way. But do you know that after 15 years, closing the PPF account is not the only option that one has? Let us discuss more regarding the same hereunder.

What are the highlights of the PPF account?

Before going any further, let us first understand PPF in a little more detail. PPF stands for Public Provident Fund and is a government-backed savings scheme that is designed to help the citizens of the country in their retirement and also inculcate the habit of savings and earning income through the same. A few highlights of the PPF accounts are mentioned hereunder.

1. A PPF account can be opened by any citizen of the country in his name or in the name of a minor. However, a person can have only one account in their name, and any additional account has to be closed at the earliest.
2. The maturity of a PPF account is for a period of 15 years and can be further extended for one or more blocks of 5 years.
3. The current interest rate on a PPF account is 7.1% per annum and investors can start the account with a minimum investment of Rs. 500 and a maximum investment of Rs. 1,50,000.
4. PPF account also provides the nomination facility which can be opted at the time of opening the account or later.
5. Investors can also take a loan against their PPF account for a maximum period of 3 years provided they meet all the underlying conditions attached with the same.
6. PPF offers tax benefits in the form of deduction under section 80C up to Rs. 1,50,000. The interest income received from PPF is also exempt as per the Income Tax Act.

What are the available options after the maturity of the PPF account?

Most investors assume that upon the maturity of the PPF account, the only option available to them is to close it and take the credit of the maturity proceeds to their primary account. However, there are other options available to the PPF account holders as well. The details of the same are mentioned hereunder. 

1. Close the account

The maturity of a PPF account is after the completion of 15 years. Upon maturity, the most common option often exercised by accountholders is closing the account. Accountholders can submit an account closure form and close the account upon maturity without having to worry about any taxation on the maturity proceeds or the income from the PPF account.

2. Continue the account without fresh contributions

The other option available to the accountholders is to continue with their PPF account without making any fresh contributions. Investors can continue such accounts for an indefinite period without making any new contributions and get the benefit of earning interest on their PPF balance at the prevailing interest rates.

 When the investor exercises the option to continue the PPF account without any fresh deposits for a period of more than a year they cannot opt to continue the PPF account with fresh deposits. Accountholders, however, get the benefit of withdrawing from the account every year as per their requirement to the extent of the balance available in the account.

3. Continue the account with fresh contributions

The final option available to the PPF account holders is continuing the PPF account even after maturity and making fresh deposits in the same. The tenure for such accounts is a block of 5 years which can be further extended for multiple blocks of similar tenure. The intimation for continuing the account with fresh deposits every year has to be submitted to the concerned bank or the post office within a period of one year from the date of maturity of the PPF account. If such intimation is not submitted in the given time frame, then no further deposits can be made in such an account. 

When the account is continued with fresh deposits, the account holder can withdraw from the account up to 60% of the available balance in a single block of 5 years. Such an account can be later continued without any deposits upon completion of any block and can help the account holder earn interest at the prevailing rates till the time such account is closed. 

Conclusion

PPF account is one of the most popular government-backed savings schemes and allows every citizen to get the benefits of a provident fund account even if an organization does not employ them. The maturity of a PPF account is after the completion of 15 years and the benefit of extension for blocks of 5 years (with fresh deposits) or indefinitely (without fresh deposits) provides additional incentives to the account holders. 

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