The public provident fund or PPF is one of the most versatile long term investment vehicles and an important saving scheme for individuals. It is an even more important scheme for all those people who don't get a stipulated monthly salary. PPF, one of the long-term investment schemes, has a maturity period of 15 years. The start of these 15 years is calculated from the end of the financial year in which the subscription was made.
Maturity of PPF
As mentioned before, the public provident fund has a maturity period of 15 years, and this maturity period starts from the end of the financial year in which it was subscribed. Anyone who invests in such schemes has two options after it has attained maturity. They either have the option to close the account or extend it for another five years, which is called the 'Block Period.' Even after these five years are over, one still has the option to extend for another five years. So, basically, there is no limit to how much an investor can extend the scheme.
Continuing the PPF
To continue the PPF scheme, there are two options available for investors. In the first of these two options, one can wish to continue the investment scheme without any further contributions, in which case; the investor may also earn an interest that's free of any taxes. In the second case, the investor may wish to continue the investment with further contributions. The rules for such extensions are the same it was during the 15-year period. So, an investor may even claim tax deductions under Section 80C up to a maximum investment amount of Rs. 1,50,000. In this case, however, the investor is required to submit a Form H for such claims.
Rules for continuing the PPF
Extending the PPF account with a subscription has to be done within a year from the maturity date of that particular account. This can be done by filling Form H and then making a deposit for that year.
Furthermore, if an investor wishes to continue the PPF without any further contribution, then such an extension will be automatically applied without having to go for the subscription within a year from the end of the maturity date. And once an investor has made the choice to block the investment for a period of five years, it cannot be changed.
One other notable aspect would be that if the account has been continued without subscription for a given year, then the investor isn't allowed to switch to the other method of continuing the PPF with an extension of contribution. Also, the interest accrued during the extension is not taxable.
Closing the PPF account
The PPF account opened by the investor can only be closed after the 15-year maturity period.This date is determined from the end of the financial year during which the subscription was made. So, the date the account was opened will not determine the maturity period of the subscription. By intimating the bank or the accounting office, an investor can close the PPF account and the entire outstanding balance at the time of maturity will be credited to their account. For example, if an investor bought a subscription on June 20, 2005, then that subscription will mature during the next immediate financial year that tends to come after the 15-year maturity period. Thus, such a subscription will mature on April 1 of the year 2021.