Public Provident Fund: The Public Provident Fund (PPF) is a great option when planning your retirement finances. Investors can extend their investment after the 15-year maturity period instead of closing it. According to the rules, the PPF account can be extended multiple times in blocks of 5 years each.
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Public Provident Fund: The Public Provident Fund (PPF) is one of the most popular small savings schemes in the country. Millions of people invest in it due to its tax savings and secure returns. PPF is a great option for planning money for retirement. It was launched in 1986. PPF is a government savings scheme that guarantees tax exemption on investments, maturity proceeds, and interest earned. This is also known as the EEE benefit.
After starting a PPF, your investment is locked in for 15 years. After this, it matures. However, the biggest decision in this savings journey for investors is made at maturity. This directly impacts your retirement plan, tax savings, and fund availability. Once a PPF account completes its 15-year term, the account holder has three options.
1. Closing the Account
If you no longer wish to continue the account, you can close it and withdraw the entire amount. This requires submitting a closure form and passbook. The PPF account is then closed.
2. Continuing the account without contributions
Under this option, you don’t close the account nor do you have to make any new contributions. Meanwhile, the existing balance continues to earn tax-free interest at the government-determined rate. You also have the option of partial withdrawals once a year.
3. Extending the PPF account in 5-year blocks with contributions
You can extend your PPF account in 5-year blocks and continue investing. This requires submitting Form 4 (or Form H) within one year of maturity. If the form is not submitted on time, the account will automatically extend without contributions.
You can invest in PPF for up to 25 years.
The maturity period of a PPF scheme is 15 years, but investors can extend the PPF scheme twice for 5 years each. This means that investments in PPF can be made for up to 25 years.
What is the tax structure of PPF?
PPF is one of the few schemes in India that follows the EEE (Exempt-Exempt-Exempt) tax system.
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