What Happens When You Forget To Extend Your Public Provident Fund (PPF) Account After 15 Years?

It is widely known that a Public Provident Fund (PPF) account comes with a maturity period of 15 years, excluding the financial year of account opening. When a PPF tenure ends after the first 15 years, then an individual has 3 options: 1) withdraw the entire money and close the account or 2) continue the PPF account without any additional yearly deposits or 3) continue the PPF account but with additional yearly deposits.

Where option 1 is a pretty straightforward withdrawal. Option 3 is where you need to submit a form within one year of maturity. Otherwise, by default, option 2 of continuing the PPF account but without any additional yearly deposit will be considered by the authorities. Remember, in case of 2 & 3rd options, one continues to operate the account in a block of 5 years.

It is thereby important to know what the key differences are between Option 2 and Option 3 as guided by Mr. Mohit Bagdi - Head of Investment Research & Founding Member of MIRA Money. He said forgetting to actively extend the account by form submission within the stipulated time does not close the account but restricts your ability to continue making fresh deposits. The account remains active, earning interest, until you decide to withdraw or close it.

PPF Maturity: What Happens If You Don't Withdraw or Extend?

Your PPF account matures at the end of 15 years. You can either withdraw the balance or opt for an extension in 5-year blocks. However, if you fail to do either of these two, then here is what happens, as per Shubham Gupta, CFA, co-founder of Growthvine Capital:

• The account remains active even if you don't submit an extension form. There is a grace period of 1 year to submit the extension form.
• Most banks continue crediting interest on the matured balance at the prevailing PPF rate until you withdraw the money.
• However, you cannot make new contributions unless you formally extend the account in 5-year blocks.
• The capital is totally safe and you can withdraw anytime you want after maturity.

Your PPF at 15 Years - The Rules No One Tells You

First things first, your money remains absolutely safe, says Siddharth Alok - AVP & Head of investment advisory.

• However, in case there is no information to the bank from your side, your PPF account is by default extended for another 5 years without any fresh contributions; your invested corpus continues to earn interest.
• But you can only make one withdrawal a year. Thus, to enjoy full benefits with new deposits, you must formally apply for extension within the prescribed time frame.
• You have the right to close your PPF account and withdraw the entire maturity amount (which is tax-free) after the 15-year term without penalty.

"In a case where you forget to extend the PPF and do not communicate your intention to extend the account on time, what happens to your account depends on the bank and its policy. Many banks, like SBI automatically extend your account for the next 5 years. However, some may mark it as closed. In this case, the best way is to reach out to the bank and request for extension by explaining your situation," commented Shruti Jain, Chief Strategy Officer, Arihant Capital Markets.

Your PPF is Safe Even After Maturity - But Here's the Catch

After the expiry of 15 years of the PPF account, an option is available to the account holder to either close the PPF account or opt for extension for a block of 5 years. This option of extension is to be exercised within one year from the end of the maturity period. For the purpose of extension, the account holder has to file the prescribed form.

As per Anita Basrur, Partner, Sudit K. Parekh & Co. LLP, in case the account holder does not file for extension within the prescribed time, the account will automatically be treated as in-active and since it is not closed, it will be extended without contribution for a block of 5 years. Any deposit made in such an account will be treated as irregular and will be refunded by the bank immediately without interest.

Thus, 'extended without contribution' would imply that the account holder will not be allowed to make further deposits; however the balance will continue to earn interest at the notified rates.

"Regarding the withdrawal limits as well, in case the account is inactive, only one withdrawal is allowed per financial year which is not the case in case of an active account. In case of active accounts, the facility of partial withdrawal under the Scheme is available in the Extended PPF Accounts, subject to the condition that the total withdrawal during the block period of 5 years shall not exceed 60% of the balance at credit at the commencement of the block period," Anita Basrur stated.

The account holder can make new contributions only after they actively apply for extension within the prescribed period of one year. In case more than one year has elapsed, the account holder cannot restart contributions, the account stays as 'extended without contribution' until the same is officially closed.

Forgot to File Form H? The PPF Consequences You Must Know

A PPF account reaches maturity in 15 years, but what if you've forgotten to renew it? After your account reaches maturity, you can either withdraw the whole amount or renew it in installments of five years, either with new contributions or without.

"If you miss choosing an extension, your account goes into "inactive" status for new deposits. The balance will continue to earn interest at the current PPF rate, but you can't deposit fresh money or receive Section 80C tax relief. Withdrawal is possible only once a year, limiting liquidity in case of emergencies," said Siddharth Maurya, Founder and Managing Director, Vibhavangal Anukulakara Private Limited.

To keep contributions and compounding going, you must send Form H to your post office or bank ahead of the maturity date. Missing this compromises worthwhile compounding years and tax benefits, Siddharth Maurya says.

PPF Extension or Withdrawal: Smart Choices After 15 Years

To keep a PPF account active, you must apply for an extension, ideally at least one year before maturity, either with fresh contributions or without them. Extensions are allowed in blocks of five years, and there is no limit to how many times you can extend.

"If you extend your account on time, you can continue depositing money each year and earn interest on the total balance. However, if you forget to extend your PPF account before it matures, the account is treated as closed for fresh deposits. This means you will no longer be able to add any new funds. That said, the money already in your account will continue to earn interest at the prevailing PPF rate until you decide to withdraw it," said Sachin Jain, Managing Partner, Scripbox.

In short, forgetting to extend stops you from contributing further, but it doesn't stop your balance from growing through interest.

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