INTERESTING FACTS ABOUT PPF – POST MATURITY
Many Thanks Friends for the response received on last week’s episode…We got many questions regarding what are the options in case of maturity of PPF after 15 years of maturity…
Again at the cost of repetition, many people are worried about their PPF accounts…and proper information is not available…Let us check what are the 3 options available :
1) Closing of PPF account after the maturity or completion of 15 years-
This option is known to all. We open an account, contribute till 15 years completion and finally close and withdraw the whole amount with interest.
Do you know this? After maturity, you can withdraw the amount in instalment too. But you can’t opt this option for more than a year.
If your PPF account matured but you have not closed means you will continue to earn the interest as long as you keep it. However, no further contribution will be allowed to such accounts. Also, you will not be allowed to open new account unless you close the existing account. After the wait of a year, the account will automatically extended for a block of 5 years (without contribution option).
2) Extend PPF account with further contribution–
Once account mature, then you have to submit the application form called Form H to either post office or bank where you have PPF account. Do remember that, you must submit the application before the completion of 1 year from the date of maturity.
In this option, you will be allowed to withdraw 60% of the balance at the beginning of each extended period (block of five years) is permitted. It means, let us say the account matured on 1st April, 2018 and the available balance is Rs.1 Cr. Then, you are allowed to withdraw 60% of this Rs.1 Cr during the block period of 5 years i.e. Rs.60 lakh. You can withdraw Rs.20 lakh in 1st year extension, Rs.10 lakh in the second year and Rs.5 lakh in the third year and so on until 5 years extension matures. The overall limit in above example is Rs.60 lakh, this can be withdrawn either in a single withdrawal or in instalment in each year.
3) Extend PPF account without further contribution–
This is the default option. This option will be for a block of 5 years. This means, if you have not withdrawn the amount nor applied to extend with a contribution, then the account will continue for 5 years.
The best feature of this option is, there is no limit to withdraw the balance during this period. You are eligible to withdraw whatever the amount available in your account at any point of time without any restriction. The balance amount will continue to earn. However, this option can be exercised only once in a year.
This Week’s Fisdom:
At Arthashastra we believe, that PPF, especially after maturity is very good option to remain invested, as part of the debt allocation, especially in the 3rd option , wherein one earns 7.8 % tax free returns with lot’s of liquidity…& yes, it is much safer then even some of the FDs…