PPF Extension Rules: If you want to make big savings through PPF and also want to continue its tax benefits, then you will have to extend the account in blocks of 5 years each. Know the rules of extension here.
PPF Extension Rules: Although there are many means of investment nowadays, PPF is still considered a very good scheme. This government guaranteed scheme coming in the EEE category can add a good amount of funds in the long term, as well as save tax in three ways. Investment in PPF, interest received on it and the amount received on maturity, all three are completely tax free.
A minimum annual investment of Rs 500 to Rs 1,50000 can be made in PPF. Currently, interest is being given on PPF at the rate of 7.1%. This scheme matures in 15 years, but if you want to take advantage of it further, then you can extend it in blocks of 5 years each. Here know how many times PPF can be extended and what needs to be done to get the extension?
Know the rules of extension
In case of PPF extension, the investor has two options – first, account extension with contribution and second, account extension without investment. If you do not withdraw the amount after the maturity of 15 years, then your account gets extended automatically. The advantage of this is that whatever amount is deposited in your PPF account, you keep getting interest on it as per the calculation of PPF and tax exemption also remains applicable. Apart from this, you can withdraw any amount from this account anytime. If you want, you can also withdraw the entire amount. In this, you get the facility of FD and savings account.
When does extension happen in blocks of 5 years each?
If you want to deposit a lot of money through PPF and want to get the account extended with contribution, then in this case the account is extended in blocks of 5 years each. You can get the account extended as many times as you need. But to get the account extended with contribution, you will have to submit an application to the bank or post office where the account is. You will have to submit this application before the completion of 1 year from the date of maturity and a form will have to be filled for extension. The form will be submitted in the same post office/bank branch where the PPF account has been opened. If you are unable to submit this form on time, then you will not be able to contribute to the account.
Remember these rules related to extension
- The first condition is that only citizens living in India can get PPF extension. Indian citizens who have taken citizenship of another country are not allowed to open a PPF account or extend an account if they already have one.
- For PPF extension, first of all you have to give an application to the bank or post office, wherever you have an account. You have to give this application before the completion of 1 year from the date of maturity.
- If the period of PPF account is extended for 5 years on your application, then you will have to deposit at least Rs 500 per year. If you do not deposit this minimum amount, then your account will be closed. To restart it, you will have to pay a penalty of Rs 50 per year.
- After choosing the option of PPF Extension, you can withdraw money from your account only once a year. The withdrawal amount can be up to 60 percent of the amount you had till the date of maturity.
