PPF: Fifteen years ago, millions of investors opened their Public Provident Fund (PPF) accounts with modest savings. As time passed, these funds have steadily increased, and now that the accounts are maturing, investors are confronted with a significant dilemma: Should they withdraw their funds now or keep investing? This is the challenge that countless investors are grappling with today, as they seek to make the best choice following their PPF maturity.
PPF has a lock-in period of 15 years.
The PPF is regarded as a trustworthy investment scheme in India, featuring a lock-in period of 15 years. Now that the maturity has arrived, the primary question for investors is what steps to take next. Many individuals mistakenly think that they must close their accounts after 15 years, but this is not true.
How many times can it be extended further?
According to the regulations, a PPF account can be extended an unlimited number of times after maturity in five-year increments. This means you can keep it going for as long as you desire. However, if you plan to make deposits during the extension, you need to complete a specific form within one year of maturity.
What are the options after maturity?
Once the account matures, investors have two choices: they can either withdraw the full amount and close the account or extend the account and keep investing. The extension option is often seen as more beneficial for those who wish to preserve their savings for a longer duration.
How can PPF be extended?
There are two methods to extend a PPF account: with contributions and without. Contributions refer to the annual investments made. If you choose the extension with contributions, you will continue to deposit money each year and earn interest. In the non-contribution option, you do not make any new investments but still earn interest on the existing amount. Partial withdrawals are permitted in both scenarios.
How much interest is earned on PPF?
Currently, the PPF offers an interest rate of approximately 7.1 percent, and it is entirely tax-free. This makes the scheme very appealing to long-term investors. There is no obligation to close a PPF account after 15 years. If you do not require the funds immediately, you can keep your account active. If you don’t need the money immediately, you can extend it and take advantage of compounding.
