Public Provident Fund or PPF is the best small saving investment scheme which offer tax exemption for the amount invested in and also for the interest derived from the investment. This small investment scheme is considered as the retirement saving of self employed people. Any resident Indian citizen can join in this Scheme. This small saving investment is long term and the maturity period of the PPF account is 15 years from the first investment. One can close the account and withdraw the maturity value only on the 16th year. But an investor can handle the PPF account in three ways after the maturity.
- Withdraw the full maturity amount by closing the PPF account. The investor can withdraw the full amount after the maturity and the full maturity value is exempted from Income Tax.
- Extend your PPF account for another 5 years block period at a time and continue to contribute every year till the end of the 5 years block period. This is the second option of PPF account when it is matured after the initial 15 years of maturity. You can avail the same tax exemption as per the initial investment period and at the same time you can avail the same rate of interest available for the entire balance in the account. You must submit Form H before one year of the maturity for extending your PPF account with fresh contributions every year. You can withdraw 60% of the maturity value (the balance before extension of the scheme) even if you extend you PPF account for another 5 years.
- Extend your PPF account for another 5 years without making further contributions. In this case also you can enjoy tax saving interest for the extended period and can make partial withdrawals once in every year by submitting Form C, but the total withdrawals must not exceed 60% of the balance at the beginning of such extension.
An investor of PPF account can choose any of the above-mentioned options at the maturity of his or her PPF account. The important thing is that one should plan properly as per his or her financial needs. Do not forget to make proper nomination for the fund.