Investment in PPF (Public Provident Fund) is considered as a lucrative investment plan. One can use the earnings from this account as pension income as the account being a life time account. But there are certain rules for withdrawing your funds which are unknown to many. In this article, I will unfold the rules which need to be taken care of while extending and withdrawing your money once your PPF account matures.
Also read Frequently asked questions about PPF
PPF account is extendable
PPF account has an initial maturity of 15 years after which the account can be extended for next 5 years. It is a myth with people that the account can be extended only once. However, the truth is you can extend it for a block of 5 years any number of times you wish to. PPF account can be extended in two ways – extended without any further contribution and extended with further contributions. Now, let us discuss the rules of withdrawing your money in both these cases.
When PPF account is extended without any further contribution
When after the initial period of 15 years, you do not extend your account or do not even close it within one year from the date of maturity, it will automatically be treated as extended and you will continue to accumulate interest on the deposited sum. However, the drawback of automatic extension is, you cannot add any subscription to it. However, in this case withdrawal is possible. You can withdraw as much as you want from your accumulated money. But it should be noted that the withdrawal can be made only once in a year.
Also Read about Sukanya Samriddhi Scheme, its Tax benefits and Comparison with PPF
Example –Let us say, at the time of maturity, you have Rs. 50 lakhs in your PPF account and you withdrew Rs. 2 lakhs. Balance amount of Rs. 48 lakhs will continue to get interest, say @ 8.5%. That means, a year later of your withdrawal, you will get an interest of Rs. 4,08,000 (8.5% of 48 lakhs) and your total balance will stand at Rs. 52,08,000. This way you can keep on enhancing your money, but cannot add anything to it from your side.
When PPF account is extended with further contributions
In case you opt to continue contributing to your PPF account even after the maturity of its initial period of 15 years, then you have to take this action within one year from the date of its maturity. In this case, you can withdraw maximum up to 60% of the total amount in next 5 years. However, you still have the option to withdraw once in each year but the total should not exceed 60% for 5 years. After completion of 5 years, you will again have the option of either continuing your subscriptions or stop contributing to your PPF account.
As a matter of common sense, it is prudent to invest more in the earlier years of life as later years are often marked by unstable income. An investment in younger years can reward you in your older days when the scope of earnings gets reduced. This way, you can choose to extend your PPF account without making further contributions to it and can enjoy the freedom to withdraw as much as you want from the available balance. {Also read How to take loan from PPF account}
Now you may also access your PPF account through online route.
