How to Extend the PPF Account?
You can close or continue your PPF account, with or without deposits after maturity (after the expiry of 15 years from the close of the financial year in which the initial subscription was made). The PPF account has a 15-year lock-in, but then you can extend it for periods of 5 years at a time, indefinitely.
Types of Extension
The investor has two extension options – with additional contributions or without fresh contributions. The rules for contributing to the extended account will remain the same. But keep in mind – once the choice is made for a block of five years, it cannot be changed.
1- Without Fresh Contributions
This option is the by default option which automatically gets activated on its own after the maturity of the PPF account if the account holder does not select the second option. Under this option, the account holder does not make any further contributions to the account and the account still earns tax-free interest for the account holder.
Read SIP vs. PPF: Better Investment Option
2- With Additional Contributions
Under this option, the account holder applies for continuing his public provident fund account with fresh deposits in a way similar to it was maintained previously. To avail, this option account holder has to apply with Form H, within 1 year from the date of maturity of the account.
How to extend your PPF account after the initial 15 years?
You need to submit Form H, within one year from the date of maturity of the account.
How to withdraw the entire PPF account balance after completion of an initial 15 Years?
You just need to submit Form C with your PPF account passbook.
When PPF Account extension not available?
1- The benefit of extension is not available to the NRIs, who opened the account before a change in their residency status.
2-PPF Accounts opened on behalf of Hindu Undivided Family cannot be extended.
Things you should know about PPF Account Extension
- If the PPF account extension not done, within one year from the date of maturity of the account, then by default the account is deemed to have been extended without further contribution for a period of five years.
- The total partial withdrawals during the extended period of five years should not be more than 60% of the total balance to his credit at the commencement of each extended period in one or more installments, but only one per year (Notification F.7/2/97-NS IIdt. 9.2.1998). For example, say the term of your PPF account is ending on March 31, 2013. The balance at that time in the account will say Rs 20 lakhs. Now, you may opt to continue the account for 5 more years (i.e. till March 31, 2018) and invest regularly as you have been. However, over the period of five years till March 2018, you may withdraw only Rs 12 lakhs which is 60% of the balance standing to your credit on March 31, 2013.
- In case the account is extended without contribution, any amount can be withdrawn without restrictions. However, only one withdrawal is allowed per year. The balance will continue to earn interest until it is completely withdrawn (Clarification 7 to Clause 9(3A) of the PPF Scheme, 1968).
- Once an account holder chooses to continue without subscription for any year, he cannot change his option to with subscription.
The Full PPF Rules, 1968 can be downloaded from PPF Rules 1968
Reactivating an Inactive PPF Account
Reviving an Inactive PPF account is a very easy task but it has to be done within 3 years else the account gets discontinued.
Let’s see some points to know how one can revive his/her dormant or inactive PPF account.
- A dormant or inactive PPF account can be easily revived by paying the pending subscriptions plus penalty.
- To keep a PPF account active and running, you need to contribute at least Rs.500 per annum, maximum up to Rs.1,00,000 in a maximum of 12 transactions. If you fail to deposit the minimum amount of Rs.500, a monetary penalty of Rs.50 per year will be levied. To revive your account, you have to pay the amount of the subscription due to the date of the reactivation plus penalty.
- You will have to visit the branch personally where you have your account to get it reactivated.
- Inactive PPF account which got matured does not earn any interest and also such an account cannot be reactivated. To claim the balance of such a matured account one has to pay the penalty.
- In case the reactivated account is going to mature soon, either you can choose to extend it further for the block of 5 years with or without contribution from the date of maturity to keep earning interest or choose to close it and claim the proceeds.