PPF withdrawal rules & options after 15 years maturity

Many of us know that PPF tenure is 15 years. But we don’t know the PPF withdrawal rules and options available after 15 years of maturity. Let us discuss this aspect in today’s post.

I purposely did not cover this topic of PPF withdrawal rules in my last post “Public Provident Fund -20 unknown facts”. Because I felt these PPF withdrawal rules and options need a separate post.

We all know that the PPF period is 15 years. But in reality,  it is more than 15 years. I tried to explain the same with the below image. 

You notice that if you opened the account on say 10th August 2015 then it will not mature on 10th August 2030 (15 years), but on 1st April 2031. Because the 15-year count starts on 1st April 2016.  Hope this concept is clear now.

Once the PPF account matures, then you have three options. Many feel that once the PPF account completes 15 years’ tenure then it is over. However, you have three options left. I tried to explain the same from the below image.

1) Closing of PPF account after the maturity or completion of 15 years-

This option is known to all. We open an account, contribute till 15 years of completion, and finally close and withdraw the whole amount with interest. Even banks and post offices share this option alone when you enquire about the PPF feature. Therefore, I may say this is a universal option for the majority of PPF investors.

For example, if you open the account on 10th August 2015, then your account mature on 1st April 2031. You simply withdraw the amount invested and interest on that fully. The account closes there itself. If you want to invest freshly again after the closure of this account, then you have to open a new PPF account.

Do you know this? After maturity,  you can withdraw the amount in installments too.  But you can’t opt for this option for more than a year. This means, if your account matured on 1st April 2016, then you can withdraw the amount in installments up to 31st March 2017.

If your PPF account matured but you have not closed means you will continue to earn the interest as long as you keep it. However, no further contribution will be allowed for such accounts. Also, you will not be allowed to open a new account unless you close the existing account. After the wait of a year, the account will automatically be extended for a block of 5 years (without a contribution option).

2) Extend PPF account without further contribution–

This is the default option. Let us say your account matured on 1st April 2016 and you neither closed the account nor applied to extend the account for a block of 5 years WITH CONTRIBUTION, then this option will be automatically activated. Do remember that the application to extend the account with a contribution for a block of 5 years must be submitted within one year from the date of maturity. Otherwise, this option will be selected automatically.

This default option will be for a block of 5 years. This means, that if you have not withdrawn the amount nor applied to extend with a contribution, then the account will continue for 5 years. For example, the account maturing on 1st April 2016 will mature on 1st April 2021. After that, if not closed the account nor applied to extend the account without contribution, then again for another 5 years, an account will be extended. There is no limit to it. You continue to enjoy earning interest on the balance available in such an account. But you are not allowed to contribute any fresh amount in such an account. Neither you are allowed to change the option after a year of the first maturity of the account.

The best feature of this option is, that there is no limit to withdrawing the balance during this period. You are eligible to withdraw whatever the amount available in your account at any point of time without any restriction. The balance amount will continue to be earned. However, this option can be exercised only once in a year.

3) Extend PPF account with further contribution-Once account matures, then you have to submit the application form called

Once the account matures, then you have to submit the application form called Form H to either the post office or bank where you have a PPF account. Do remember that, you must submit the application before the completion of 1 year from the date of maturity. For example, if the account matured on 1st April 2016, then you must exercise this option by 31st March 2017. Otherwise, the second option mentioned above will be activated by default. Once you submit the form, then the account will be further extended for a block of 5 years.

If you have not opted for this option but continue to contribute as usual, then such a deposit amount neither earns any interest not eligible for Sec.80C tax benefit. To regularize it, you have to write it to the Ministry of Finance, (DEA) NS Branch through the Accounts Office to regularize the account which was continued by him without giving the option.

Once you opted this option, then you can’t go back to the 2nd option mentioned above. Few want to go back to 2nd option of above, mainly because of the liquidity available there. Because in this option, you will not feel so free to withdraw the balance as in the case of the 2nd option.

In this option, you will be allowed to withdraw 60% of the balance at the beginning of each extended period (block of five years) is permitted. It means, let us say the account matured on 1st April 2016 and the available balance is Rs.1 Cr. Then, you are allowed to withdraw 60% of this Rs.1 Cr during the block period of 5 years i.e. Rs.60 lakh. You can withdraw Rs.20 lakh in 1st year extension, Rs.10 lakh in the second year and Rs.5 lakh in the third year and so on until 5 years extension matures. The overall limit in the above example is Rs.60 lakh, this can be withdrawn either in a single withdrawal or in installments each year. However, only one withdrawal is allowed in each Financial year.

This rule applies to the next block of 5 years extension again.

Note that, for the first block of 5-year extension if you opted for the 3rd option, then in the next 5-year block period, you can opt for the 2nd option without submitting Form H. So you are free to choose the option after every such extension.

I hope this will bring you clarity on PPF withdrawal rules & options after 15 years of maturity.

Read our other posts related to PPF

• PPF-When to contribute to get higher returns?
• PPF-Loan and Withdrawal
• Interest of PPF KVP NSC SCSS and Sukanya Samriddhi for April-June 2016
• 15 Rules of availing Loan against PPF (Public Provident Fund)
• How to transfer PPF Account from Post Office or Bank to another Post Office or Bank?
• Excel PPF Calculator-Calculate goal, loan or withdrawal amounts
• All about Public Provident Fund (PPF)
• Post Office Savings Schemes -Changes effective from 1st, April 2016