PPF Lock-In: How To Benefit Even After 15-Year Maturity Period On Public Provident Fund Scheme Is Over

Public Provident Fund (PPF) is a government-backed scheme aimed at promoting long-term investments. The returns you earn on PPF investments are tax-free and the deposits are eligible for exemption under Section 80C of the Income Tax Act, 1961. PPF is considered a suitable investment option for risk-averse investors due to its secured nature.

Interest rate for the PPF scheme is decided by the Finance Ministry each quarter. Currently, the PPF interest rates stand at 7.1% for Q3FY25.

PPF investments can be started with contributions as low as Rs 500. The maximum investment in a PPF account has been capped at Rs 1.5 lakh in a financial year. The scheme has a maturity period of 15 years after which investors can withdraw the maturity amount.

However, the PPF scheme also offers the flexibility to extend the tenure after maturity. PPF investments can be extended in blocks of five years each, after the maturity period.

Investors have three options after the maturity of the 15-year lock-in period for the PPF account:

• Close their PPF account and withdraw the entire amount.

• Extend their PPF account without making fresh deposits.

• Extend their PPF account with new deposits.

Investors have the option to extend their PPF investments without making fresh deposits and the whole amount will continue to incur interest at applicable rates.

Investors can even make partial withdrawals of any amount once in a fiscal year. They will continue to receive interest on the remaining amount.

However, investors cannot withdraw more than 60% of the amount during the first five-year extension period.

Investors, opting to continue to extend their PPF account without depositing any amount for one year, cannot choose to make deposits in the subsequent five-year block.

Investors also have the option to continue with their PPF investments by making fresh deposits. In this case, they are required to notify the bank or the post office before the end of the financial year. The investor needs to submit Form H for an extension of the PPF account.

The new deposits after the extension would continue to accrue interest. Investors can also avail tax benefits on such deposits.