Public Provident Fund (PPF) Extension Rules Upon Maturity

Published: May 24, 2016 at 8:42 am

Last Updated on

The extension rules and options available for public provident fund accounts after maturity or after completion of 15 years are discussed. The national savings institute (NSI India) has a wonderful pdf rule booklet with all notifications and clarifications since inception, and this post is entirely based on that.

The aim here is to consolidate my understanding of the PPF extension rules after a question by Nihar Ranjan Pal at FB group Asan Ideas of Wealth yesterday.

The PPF rule book from

We all know that a PPF matures after 15 years. Or 15 financial years from the FY of opening. For example, an account opened in FY 2000-01 (or before 31st March 2001) will mature on 1st April 2016.

There are three options available to a subscriber after maturity.

Option A Close the account and be done with it!

Option B Keep the account open without further contributions.

Option C Extend the account for 5 years with further contributions.

Let us look at B and C in detail.

Option B: PPF has an awesome feature. One can keep the account alive without contributions and the corpus will continue to earn interest!

However, if a matured PPF account is not extended for 5 years within one year of maturity, then such an extension is no longer possible.

The extension is necessary only if further contributions need to be made. If there is no need for such contributions either from a tax planning or corpus building point of view, an extension need not be made.

In this case,

The subscriber can make one withdrawal in each financial year of any amount within the balance

Also, if option B is chosen then unless the account is closed, a new account cannot be opened.

Option C: If further contributions are necessary then the account has to be extended for 5 years after maturity. Contributions should not be made without extension. And if extended, at least the minimum contribution of Rs. 500 a year should be made.

The extension has to be made via form H

If contributions are made without extending the account, they will not earn any interest and are not eligible for 80C deductions.

Option  once chosen cannot be revoked. The minimum contribution has to be made to keep the account alive.

In this case,

the subscriber is eligible to make partial withdrawals not exceeding one every year subject to the condition that the total of the withdrawals, during the 5 year block period, shall not exceed 60 per cent of the balance at his credit at the commencement of the said period. This amount can be withdrawn either in one installment (one year) and or in more than one installment in different years as per requirements of the subscriber.

This rule will apply to each extension period and is the key difference between options B and C.

Therefore, before extending the PPF account it is important to consider liquidity requirements. I see no need to extend the account if there is no use from further contributions.

If the PPF account is used for a child’s education then option B may be better. When used for retirement, it depends on the money required and the kind of corpus available from other sources.

Also, if the PPF account was opened when young, it makes sense to keep extending it with further contributions. The main advantage of a PPF account is it can be just kept alive in initial years and periodically gains from equity can be shifted here (subject to total contribution limit). As we head to our mid-40s and 50s, the contribution can be increased gradually.

Do share if you found this useful
Share your thoughts on this topic at the  Reddit freefincal_user_forum

Reach your financial goals like a pro! Join our 1600+ Facebook Group on Portfolio Management! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps