Public provident fund or PPF account is a Government of India or GoI-backed small saving scheme, which is hundred per cent risk-free. This funding device has been designed in such a means that it helps an investor meet its long-term funding targets like greater research of kid or monetary necessities post-retirement. A PPF account falls below ‘EEE’ class because it permits an investor to say revenue tax exemption on most deposit restrict of ₹1.50 lakh in single monetary yr and PPF curiosity earned on one’s deposit is totally exempted from any revenue tax outgo. Currently, PPF rate of interest introduced by the GoI for April to June 2023 quarter is 7.10 per cent.
Though, PPF account has a maturity interval of 15 years, an investor can lengthen its account in 5 years blocks for infinite variety of instances. Most importantly, after extension of PPF account post-maturity, one will be capable of withdraw 60 per cent of the PPF maturity quantity in case there’s any monetary emergency arises earlier than completion of 5 yr extension. So, it turns into fairly tough whether or not one ought to withdraw PPF maturity quantity after 15 years or one ought to lengthen PPF account for subsequent 5 years.
PPF withdrawal vs PPF account extension
On what an investor ought to do after maturity of PPF account, Pankaj Mathpal, MD & CEO at Optima Money Managers stated, “PPF accountholders are allowed to extend one’s account in five year blocks for infinite number of time after 15 years maturity. However, for that they need to submit Form H at their bank of post office where they have opened their PPF account. But, extension offer can be exercised when there is no need for any big amount. As PPF is tax exempted, PPF withdrawal should be the last option and one should try to continue investing in PPF as it helps an investor beat bank fixed deposit (FD) return with ease and it is 100 per cent risk-free.”
PPF withdrawal guidelines after extension
On PPF account extension would result in blockage of 1’s PPF maturity for subsequent 5 years, Pankaj Mathpal stated, “PPF account extension doesn’t mean blocking your PPF maturity amount. As per the PPF withdrawal rules, an investor is allowed to withdraw up to sixty per cent of the PPF maturity amount at the time of exercising PPF account extension. This means, if an investor extends PPF account for next five years after 15 years maturity, one would be allowed to withdraw 60 per cent of the PPF maturity amount after 15 years maturity.”
Speaking on PPF account extension guidelines, SEBI registered tax and funding professional Jitendra Solanki stated, “While going for PPF account extension, an investor has two options — earning interest without contribution and earning interest with contribution.” Solanki stated that one ought to decide each curiosity and funding possibility because it helps an investor to get most compounding profit. He suggested PPF account holders to maintain on extending PPF account interval after maturity because it provides greater returns than financial institution FD and different risk-free funding devices.
How to earn most PPF curiosity?
“By extending PPF account beyond 15 years of maturity allows an investor to create a retirement corpus that can help him meet the financial requirements after retirement,” stated Solanki including, “One should invest in PPF account by 4th of any month as it would enable the investor to get interest for that month as well.”
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Updated: 10 Jun 2023, 11:14 AM IST