After a Public Provident Fund (PPF) account completes its 15-year maturity period, investors have three distinct options: withdraw the entire corpus and close the account, extend it for another five years with or without fresh contributions, or make phased withdrawals for regular access to funds. According to reports from Mint, the choice depends on factors such as financial goals, liquidity needs, tax planning and long-term wealth creation strategies.
Investors can choose to close the account by reaching out to their bank or post office branch where the account was opened 15 years back. The entire accumulated amount, including interest, will be credited to the linked bank account after processing. As reported by Mint, the proceeds after closure are not subjected to taxation as they fall under the Exempt-Exempt-Exempt (EEE) category, meaning contributions, interest earned, and maturity amount are completely tax-free. This option may suit investors needing immediate liquidity for goals such as house purchases, higher education funding, retirement expenses, or home loan repayment.
An investor can extend their PPF account in blocks of 5 years as many times as desired by submitting Form H (or Form 4) at their bank or post office within one year of maturity. According to Mint, continuing contributions allow investors to deposit up to ₹1.5 lakh per year with a minimum of ₹500 per financial year. Since contributions continue, investors can claim Section 80C tax benefits under the old tax regime, allowing deductions up to ₹1.5 lakh per financial year from taxable income. However, if extending for another 5 years after the first 15-year term, only 60% of the balance can be withdrawn over the new 5-year period, with only one withdrawal permitted per year.
If Form 4 is not submitted, the account will automatically renew in 5-year blocks but without fresh contribution permissions. As reported by Mint, even without fresh contributions, investors can still make withdrawals, but only one per year is permitted. For example, if an account opened in 2000 accumulated ₹30 lakh at maturity in 2015 and was extended to 2020, withdrawals can be made up to the available balance during the extended period, subject to the one withdrawal per year rule.
PPF accounts can also permit partial withdrawals when operational for at least 5 years, allowing access to accumulated funds while maintaining the account's operational status. According to ClearTax reports cited by Mint, investors can make partial withdrawals of up to 50% of the balance available at the end of the fourth financial year preceding the withdrawal year. This option requires submitting Form C to the bank or post office and enables account users to access funds while continuing to enjoy compounded interest advantages.
