The Public Provident Fund or PPF is one the best and safest form of investment options available for a risk-averse investor. The PPF is backed by the government of India and provides guaranteed returns on maturity along with accumulated interest amount. With a maturity period of 15 years, an individual can park a minimum of Rs 500 per annum and a maximum of Rs 1,50,000 per annum.
The investor also stands to get the benefit of tax exemption under Section 80C of Income Tax for the investment made towards PPF account. As the PPF falls under EEE Category (exempt-exempt-exempt), the initial invested amount, interest earned, the maturity value is all exempt from the Income Tax Act.
Hence one has to weigh all the options carefully while dealing with the maturity value of the PPF Account.
Once the PPF account gets matured, the investor will have the following list of three options to exercise. They are:
- Close the PPF account
- Continue with the account without making any new investment
- Extend the account for further five years
Close the PPF Account
The investor can close the PPF account, on maturity and transfer the proceeds to his/her savings account. For this, the investor will have to submit an application to the respective bank branch or post office in the prescribed format along with the relevant details of the savings account and the public provident fund account.
If the investor needs funds, then they can close their PPF account on maturity and utilize the money accordingly.
Make sure, to submit the original passbook of PPF account, a cancelled cheque along with the application form.
Continue with the account without making any new investment
An investor has an option to continue the PPF account as it is without making any new investment/ contribution towards the account. This option can be chosen, if the investor does not need the money for any immediate requirements. As the PPF account fetches interest, one can opt to continue with the account.
It is a default option there is no need for any paperwork to do for this. Here, the investor will have the option to withdraw the money per financial year and the limit is restricted to one time of any amount from their PPF account.
Extend the account for further Five years
The investor can also extend the PPF account for another five years and this option can be chosen, if they do not need funds for immediate requirements. The PPF account provides an option for extension to the investor to continue to invest in the same account.
For this, the investor will have to submit a copy of the Account Extension Form after duly filled in and signed form, to the post office within one year of the account's maturity.
Note: Investor can extend the PPF account as many times (indefinitely) as per their requirements in a block of five years. Maturity of a PPF Account will happen during April, so the option to extend with fresh investments will be available till April of the next year.