Whether to Open a New PPF Account after the Maturity of Existing PPF Account or Extend it?
By Anupama Deshpande | Feb 08, 2019

Public Provident Fund (PPF) is a scheme of the Government of India for the investment which not only offers guaranteed returns but also gives tax rebate under section 80C of Income Tax Act. PPF is one of the most popular investment instruments available in India due to variety of features offered by it.

One most important advantage of PPF Account is that the balance lying in PPF account is not subject to attachment under any order or decree of court.

A Public Provident Fund (PPF) account gets matured after the completion of its term i.e. after 15 years from the end of the year in which the account was opened.

Suggested reading Process for Withdrawal of Funds from PPF Account

Suppose you have invested in PPF and now it is getting matured then there are following 2 options available to you for PPF investments:

(1) Open a new PPF account after the existing PPF account gets matured

You are allowed to open a new PPF Account after existing PPF Account gets matured. You can receive the maturity proceeds of existing pPf account and open a new PPF account by furnishing all the formalities to open a new account.

(2) Extend the existing PPF account for further period of 5 years

It is not necessary to withdraw the balance from your PPF account as soon as it matures. If you do not want to withdraw from your PPF account after its maturity, you can extend it further.

PPF account can be extended in the block of 5 years for any number of times. You will continue to receive interest on your balance amount kept in your PPF account.

Suggested reading FAQ on PPF

Now the question arises as to whether to open a new ppf account after the maturity of existing ppf account or extend it. The suggestion is given below as a solution to this question:

First of all, you should make it clear whether you require the funds of your PPF account right now or you don't require the same at present and can wait for further period of 5 years. If your answer is that you can wait for 5 more years then you should extend your PPF account after it gets matured. The supporting reasons behind this are:

(1) For opening a new account, you need to furnish all the formalities again and the lock in period of new account will be of 15 years. While if you extend your PPF account after its maturity, you need to extend it only for 5 years by submitting a request for its extension and there is no difference in the rate of interest. For extending the tenure, you need to submit Form H within one year from the date of maturity.

(2) Further, if you are extending your PPF account, you can extend it in following 2 ways:

(a) Extension with Contribution: You can make deposits every year in your PPF account same as earlier. In this case, withdrawal is restricted to a maximum of 60% of the balance at the beginning of the extended period.

(b) Extension without Contribution: The balance in your PPF account will continue to earn interest at the prevailing rates till the account is closed. The total amount of withdrawal is capped to the credit balance at the beginning of the extension period of 5 years. Here, you are allowed to withdraw once every financial year.

Suggested reading Closure of PPF Account before Maturity

In case, you do not require the PPF Account Proceeds on its maturity then it is not recommended to close your existing PPF account after maturity and open a new PPF account. Instead you must extend your PPF account on its maturity.