PPF account which is also known as Public Provident Fund is one of the most common and favourite instrument for retirement planning amongst Indians as it can be opened by any individual whether salaried or self employed. PPF account rules provides investors guaranteed return (for a particular financial year) along with interest income which is tax free with certain limitations to PPF withdrawal rules.
Lots of us have been investing in PPF account from some years so as to generate a huge corpus at the time of retirement and also for getting PPF tax deduction under Section 80C. But none of us wondered as to what are PPF rules after maturity. This article will primarily focus on later stages of a PPF account rules but before that let`s first categorize PPF into some important stages
Important Stages of PPF Account
Stage I - After which first loan can be disbursed (Form A is required)
Stage II- After which first withdrawal can be made
Stage III- Maturity of PPF Account
Stage IV- Extension for first block of 5 years (PPF Form H is required)
Stage V- Extension for second block of 5 years
You must be thinking why the graph is not terminated at 15th year and instead it shows its life till 25th year. Well the answer to this question is that life of a PPF account does not get over as soon as it completes 15 years, rather its has no fixed life. Many people are in an impression that life of a PPF account is only till 15 years from the date of account opening. However PPF account does not get over after completion of 15 years. After maturity of 15 years, PPF can be further extended for a block of 5 years infinitely.
The above graph shows extension for only 2 blocks as people also have assumptions that maximum upto 2 blocks of extensions are permissible which is not true. The PPF account can be extended in blocks of 5 years for an indefinite period as per the instructions from account holder.
Example:- If a PPF account matured in March 2012, it can be further extended for a period of 5 years which means new maturity date will be March 2017. Further if the account holder wishes, account can be extended for another block of 5 years and this can continue.
PPF Rules After 15 Years
Let`s understand various kinds of extensions. There are 2 options which are available with an account holder for extension of PPF account where you have a PPF account in SBI or with any other bank
1) Without further subscription:- This is a kind of extension which does not require any further subscription to this account. The account holder has the option of getting tax free interest for further period after maturity of 15 years. This option is the by default option which gets activated on its own after the maturity of PPF account , if the account holder does not select the second option. The account holder does not make any further contributions to the account and the account still earns tax free interest for the account holder.
Note:-Once an account holder chooses to continue without subscription for any year, he cannot change his option to with subscription.
2) With Further Subscription:- Under this option, the account holder gets the option of continuing his public provident fund account with fresh deposits in a way similar as it was maintained previously. In order to avail this option account holder must visit the bank branch and fill up the specific form (form H) and that too within 1 year from the maturity of the account. As per the PPF rules, you can also the account holder can withdraw maximum 60 percent of the amount which was at the beginning of each extended period in one or more instalments but maximum one in a year. The maximum amount that can be withdrawn totally in 5 years is 60% of the amount at the beginning.
Example:-Mr. Arun`s SBI PPF account got matured in march-2010 with the balance of Rs.10 lakhs. He subscribed for another block of 5 years then the total amount that can be withdrawn during the block of 5 years (2010-2015) is Rs.6 lakhs.
In case you want to continue your PPF account after 15 years of maturity, you need to fill up Form H for this purpose
PPF Withdrawal Rules Differentiation
1) Under first option that is without subscription there is no limitation for the maximum amount withdrawn per year during the block of 5 years or totally in 5 years but in case of with subscription option account holder can withdraw maximum of 60% percent amount only.
2) A person can keep investing in his PPF scheme with bank like SBI PPF account even after the maturity in case of second option
But in case of first option that is without subscription there is no fresh investment and the original amounts keeps earning interest
You need to have PPF withdrawal form C for withdrawing money from your PPF
PPF rules states that it does not get mature after the time duration of 15 years from the year Public Provident fund account was opened. This account has a life even after expiry of 15 years. An investor can continue the account for further period with subscription or can even continue the account without subscription but you are bind by certain PPF withdrawal rules