The Public Provident Fund (PPF) is a popular long-term investment scheme in India, offering attractive interest rates, tax benefits, and the safety of government backing. The standard maturity period for a PPF account is 15 years. However, investors have multiple options upon maturity to continue benefiting from their investment.
Options Upon PPF Maturity:
Withdraw the Entire Amount: After 15 years, you can close your PPF account and withdraw the total accumulated amount, which includes both your contributions and the interest earned. This entire sum is exempt from tax, providing a lump-sum benefit.
Extend the Account with Contributions: You can choose to extend your PPF account in blocks of 5 years while continuing to make contributions. To do this, you must submit Form H within one year from the date of maturity. This option allows your investment to grow further with continued deposits and interest accrual.
Extend the Account Without Contributions: If you prefer not to make additional contributions but still want your existing balance to earn interest, you can extend the account without any fresh deposits. The account will continue to earn interest on the existing balance, and you can make one withdrawal per financial year if needed.
Opening a PPF Account:
A PPF account can be opened at designated post offices and authorized banks in India. Both public and private sector banks offer this facility. Additionally, accounts can be opened on behalf of minors, with parents or guardians managing them until the minor reaches adulthood. However, Hindu Undivided Families (HUFs) are not permitted to open PPF accounts.
Potential Growth of PPF Investment:
The current interest rate for PPF is 7.1% per annum, compounded annually. Consistent investments can lead to substantial growth over time. For instance:
Monthly Investment of ₹5,000:
After 15 years: Approximately ₹16.28 lakh
After 20 years: Approximately ₹26.63 lakh
This demonstrates the power of compounding and the benefits of long-term, disciplined investing in PPF.
In conclusion, the PPF scheme not only offers a secure and tax-efficient investment avenue but also provides flexibility post-maturity, allowing investors to tailor their investment strategy according to their financial goals.
