PPF Account To Complete 15 Years? Here Is What You Can Do!
BENGALURU: Budget 2016 had its own pros and cons, on one side where the journey from house to home was made easy; on the other car owning was made costlier. Tax redemptions were given for rent payers, small tax payers, and NPS holders, but the price of cigarettes and branded clothes was increased. Though the budget hardly talked about the rural prosperity, overall it was a mixed budget for all of us! Another decision which the government made through this budget was to make PPF taxable with a number of other rules also surrounding it. According to this new rule, 60% of employee contribution towards PPF corpus after 1.4.2016 would be taxable, if the PPF is not used for buying an annuity. This was done, as many experts proclaimed to balance the extra perks given to the NPS. But the government received hard opposition to their new law and had to roll back PPF in a matter of days. New rules were introduced, but it still had the clause of taxing PPF. Currently the PPF rate is down and could dip further as interest rates are cut reports the economic times. Below we try to answer all your questions about what to do if your PPF account is to complete 15 years.
You can extend your tenure!
Your PPF account matures in 15 years, and that makes you eligible to withdraw your money from your account. However, if you wish to extend the duration of your PPF account, you can go for it! Two options will be available for you; one is to continue with the account without further contributions and second is to continue investing in the account. If you choose to continue investing in it, you have to submit an application for extending the account tenure for a block of five years within a year from the maturity date. After five years, the account tenure can be further extended for another five years. If you go for the second option, you don't submit an application for tenure extension. In this case, the PPF account tenure automatically gets extended but you cannot make further contributions to it. Once this option of continuing without contribution has been selected, the subscriber cannot alter it to make further contributions to the account.
You can withdraw during the extension period (T & C applied)
The withdrawal rules are more lenient during the extension period. You can withdraw any amount if the account tenure has been extended without contribution. But that you can do once annually. The balance though will earn interest till it is withdrawn completely. You can withdraw up to 60% of the balance that is in the account at the beginning of each block of five years, if the tenure has been extended with contribution
You can foreclose your Account
The investors have been allowed by the government from this year onward to close their PPF accounts early if the account in question has completed five years. If someone requires money for the education of their children or may be for medical issues, the account can be closed but with a penalty! For all the preceding years, the withdrawer will get 1% less interest. Hence you have to be very careful and choose wisely while closing your account!
You can transfer your account
Your PPF account can be transferred to a bank or Post Office branch, which ever you find more convenient. Online operation of PPF accounts is allowed by many banking behemoths, which makes it easy to do the transaction. But this service by the banks is only available for senior citizens.
Though many changes have been made in the PPF rules but no rules have been changed when it comes to taxation and other laws. Whether you extend the account tenure with or without contributions, the interest earned is tax-free and contributions can be claimed as a deduction under Section 80C. The rules for contributing to the extended account also remain the same, with a cap of Rs 1.5 lakh in a financial year. The only change is that NRIs, who may have opened PPF accounts before the change in their residency status, are not allowed to extend the account tenure after maturity.
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