How to deal with your PPF account on maturity

A Public Provident Fund (PPF) account has a maturity period of 15 years and investments up to Rs 1.5 lakh every financial year are applicable for tax deduction.

The PPF maturity amount is also taxfree. So, it is recommended that one weighs the options carefully while dealing with a maturing PPF account.

Three choices

• At the time of maturity, you have three choices:
• Closure of the account
• Extension for a block of 5 years
• Continue the account without any new contribution

Close the account
If an account holder needs the funds immediately, he can choose this option. One can get the maturity proceeds transferred to his savings account by submitting an application to the bank or post office in the prescribed format with details of PPF and savings accounts. The original passbook and a cancelled cheque must be submitted along with the signed form.

Extend the account
If the funds are not needed immediately, an account holder can choose to use PPF as a tax saving tool and continue investing in the account by applying for extension. Provided for a block of fi ve years, extensions can be taken as many times as one wishes to. A form prescribed for extension must be fi lled and submitted to the post offi ce within one year of maturity of the account.

Continue the account
If the account holder does not need the funds immediately and wants it to earn tax-free interest, without making any further contributions, he/she still has the option to withdraw the funds subject to one withdrawal each fi nancial year of any amount. This is a default option and does not need any paperwork.

Point to note

• Maturity date of PPF account is reckoned as 15 years from the end of the financial year in which the account was opened. Hence the maturity date will always fall in the month of April.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)