What you can do when your PPF account is nearing maturity

For the huge mass of conservative investors looking for guaranteed returns Public Provident Fund, or PPF, is one of the most appropriate avenues of savings. It offers a 7.1% interest with the principal, interest and maturity amount fully tax-free.

PPF contribution must be locked in for 15 years. However, if you want to invest for a longer period of time, you can do so by extending your account for a block of five years.

The minimum PPF deposit is Rs 500 with a maximum investment of Rs 1.5 lakh per year.

But if your PPF account is nearing maturity or you have to withdraw money under some compulsion, what are the options available?

Here is a guideline.

Complete withdrawal upon maturity

At the end of the 15th year, you can close your PPF account and withdraw your entire deposits. To close your PPF account, fill up form C and submit it to the post office, or bank, where you have opened or maintained the account.

Extend PPF account without contributions

After the 15th year, you can even leave the money in the fund without making any new contributions. The same rate of interest will continue to be paid on the balance until it is closed.

Each financial year, you would be granted one withdrawal, the maximum limit being 60% of the gross amount in the fund.

Extend PPF account with contributions

If you wish to continue and keep making contributions, you can opt for an extension of 5 years or more. You have the option of keeping the account open with or without contributions after the maturity period of 15 years.

The same interest rate will continue. So will tax benefits on the annual contributions.

Premature withdrawal

Only under certain conditions can you close your PPF account five years after opening the account. Here are the conditions.

You won’t be able to withdraw the whole balance out of your PPF account. The maximum withdrawal amount is 50% of the balance at the end of the fourth financial year or 50% of the balance at the end of the preceding year, whichever is lower.

To withdrawal the partial amount from the PPF account, you must fill out form C and submit it at your concerned bank branch or post office.