Should you continue investing in PPF account without contribution even after 15 years?

Answer: After maturity on completion of 15 years, the PPF account holder has two options. Either you can extend the account for another block of five years with the option “with contribution” by submitting Form-4. Or you can maintain your account after maturity without making further deposit for any period. Please note that the balance in your account will continue to earn interest at the rate applicable to the scheme from time to time. You can make a maximum of one withdrawal per year of any amount. Once the account is continued without deposit for more than one year, the account holder will not have the option to again continue the account with deposit. This option is to be exercised to continue the account with the balance within one year of completion of five years.

The rate at which you will be paid the interest is the same under both the options. The interest earned under both the options is tax free in your hands. So if you don’t need the money immediately, it certainly makes sense for you to continue with the account without contributions for as long as you want. You can make partial or full withdrawals at any time but only once in a year. The decision of whether or not to let the money stay in the PPF account after maturity is not determined simply because it earns higher tax-free returns. There are other considerations such as the need for funds or alternative avenues for deployment of funds at a later stage. Tax Returns etc., which ultimately decide whether one keeps the money in the PPF account after maturity or withdraws it on maturity.

(Balwant Jain is a tax and investment expert and can be reached on his Twitter handles jainbalwant@gmail.com and @jainbalwant)