For long-term investors, the Public Provident Fund (PPF) continues to remain a reliable savings option even after maturity, with the flexibility to extend the account without any limit.
A PPF account comes with a 15-year lock-in period. Once this period ends, investors have the option to either withdraw the full amount or extend the account in blocks of 5 years. Importantly, there is no restriction on how many times the account can be extended.
However, the extension is not automatic. To continue contributing, investors must submit Form 4 within 1 year from the date of maturity.
Adhil Shetty, CEO of BankBazaar.com, said, “A PPF account can be extended indefinitely in blocks of five years after maturity, provided Form 4 is submitted within one year. There is no cap on the number of extensions.”
At the current interest rate of 7.1%, along with EEE (Exempt-Exempt-Exempt) tax benefits, PPF remains a strong fixed-income investment option. The ability to extend without changing the structure allows investors to continue benefiting from compounding.
Investors can choose between 2 extension options. The first is extending with contributions, where fresh deposits can be made and interest continues to accrue. The second is extending without contributions, where the existing balance earns interest but no new funds are added. Both options allow partial withdrawals, though rules may vary.
Extending a PPF account helps maintain steady, tax-free returns while keeping savings secure. It is particularly suitable for those seeking stability without exposure to market risks. Over time, compounding can significantly enhance the overall corpus.
“From a portfolio standpoint, the decision to extend should be aligned with your long-term asset allocation, especially if you are looking to maintain stability within your fixed-income bucket,” Shetty added.
Disclaimer: The Mainstream advises users to check with certified experts before taking any investment decisions.
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