One option for the account holder is to withdraw the entire amount including interest and on maturity the account is closed. The longer you continue this, the better returns you will get thanks to compounding.
Public Provident Fund (PPF) matures in 15 years, but it is not mandatory for the account holder to close the account. You can extend it for another five years. The first time limit of PPF or the cycle is of 15 years. After this, you can extend it any number of times in a time block of five years. In this you have to take care of the interest.
One option for the account holder is to withdraw the entire amount including interest and on maturity the account is closed. But if you want to make the best use of PPF, then it is best to increase it till you retire. The longer you continue this, the better returns you will get thanks to compounding.
Understand in easy language
How does compounding work? Let’s understand it in easy language. Suppose you invest Rs 1 lakh every year in PPF. The average interest rate for 15 years is 7.5 percent. You will have around Rs 31 lakh on maturity. According to the news of Mint, it will take a little less than 10 years to double this money at the same interest rate.
Have to do this work
If you extend your PPF for another five years, you have the option of either continuing your contribution or continuing without it. To carry forward the PPF account, you have to inform your bank or post office about this. For this, you have to submit Form 4 to the bank before the end of 5 years. Because it does not have auto-renewal facility.
If you do not submit it within one year, you cannot make a fresh contribution. However, till you do not withdraw from PPF, interest will continue to accrue on the balance amount. If you decide to continue with your contribution, you will have to fill Form H.
Can withdraw amount from account
Form submission is mandatory. Otherwise, your account will be treated as irregular, and no interest will be paid on the new contribution. You will also not get tax deduction benefit under section 80C. If the account holder decides to continue with fresh contributions, he can withdraw up to 60 per cent of the account balance at the beginning of every five years.
