Public Provident Fund or PPF is the best option for long term investments. It can be extended even after its maturity is completed.
New Delhi: Public Provident Fund or PPF is one of the most sought-after long-term investment schemes in the country due to its tax benefits and guaranteed returns. Most of the salaried class individuals opt for PPF as the scheme is easy to maintain with a nominal monthly contribution. Note that it falls under the exempt-exempt-exempt (EEE) category and is not applicable for tax deduction.
An option for the account holder is to withdraw the entire amount including interest and close the account on maturity. But if you want to make the best use of PPF, it is best to retain it till you retire.
Extend PPF account for 5 years after maturity without any further contribution
This option allows you to extend the maturity period of your account up to 5 years. That is, interest will continue to accrue on PPF fund. And you do not have to make any new contributions during this extended five-year period. If you have extended it by 5 years but you have needed some money during these 5 years. What should be done then? You can withdraw the amount as partial encashment during these five years period. But you can make only one withdrawal per financial year. If you do not inform the bank or post office about your preference after 15 years, this is the default option that gets applied to your PPF account.
One can extend the PPF account for five years even with contribution
This option is the same as the earlier rule, in the sense that it allows you to extend the maturity period of the PPF account by up to five years. The only difference is that now you need to make a fresh contribution every year. But how much? The minimum is Rs 500 per year, which is not very much. By the way, you need to inform the bank or post office about this option because in the absence of intimation from your part, it will be treated as PPF extension without contribution and any fresh amount deposited by you in the account during this five year period and you will not get any interest.
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