Public Provident Fund (PPF) is counted among the safest and popular investment options in India. When the PPF account matures after the completion of the lock-in period of 15 years, then the big question before the investors is whether to withdraw the deposited amount, extend the account or continue investing. Financial experts believe that this decision is not only based on the amount received on maturity, but also on future financial needs and investment goals.
The biggest feature of PPF
Even today, PPF is included among those selected investment schemes which have EEE (Exempt-Exempt-Exempt) status. This means that the investment gets tax exemption under Section 80C of the Income Tax Act, the interest received is completely tax-free and there is no tax on the amount received on maturity. This is the reason why it remains popular among long-term investors.
Three options are available after maturity
After the PPF account matures, the investor has three options. First, close the account by withdrawing the entire money. Second, continue making new investments by increasing the account in a block of 5 years. Third, expand the account but do not make new investments in it.
According to experts, for those who do not need money immediately, expanding the account can be a better option. Due to this, interest fixed by the government continues on the deposited amount and the benefit of tax-free compounding also continues.
When should money be withdrawn?
If an investor needs money for retirement, buying a house, children’s education or any other major financial goal, it may be appropriate to make a withdrawal on maturity. However, mere completion of maturity should not be considered a reason for withdrawing money.
Expansion can be beneficial in the long run
Government guaranteed schemes like PPF provide stability to investors amid market fluctuations and global uncertainties. Financial advisors say that for investors whose aim is to build long-term wealth safely, expanding the PPF account and continuing to enjoy the benefits of compounding may prove to be a wise move.
