Public Provident Fund: Want to become crorepati? Know these PPF account extension rules before entering 2019

Public Provident Fund (PPF) account can help you earn over Rs 1 crore. However, at the current interest rate of 8 per cent, which is compounded annually, you cannot become a crorepati in the stipulated lock-in period of 15 years. Even if you invest the maximum allowed amount of Rs 1.5 lakh per year, your total lump sum at the end of the lock-in period of 15 years would be around Rs 46 lakh (assuming the interest rate remains 8 per cent). So, how to go ahead?

You can enjoy the benefit of PPF account extension. As per rules, PPF accounts can be extended in blocks of five years each. During the extended period, you can continue making deposits in the account and earn the compounded interest. 

In 25 years, at the current rate of interest, you may get over 1.2 crore provided you continue making deposits. However, here are a few rules you must know about PPF account extension: 

1. You can extend the PPF account after 15 years indefinitely in blocks of 5 years each. 

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2. You can make fresh deposits in the extended account. For this, you must intimate the Account Office before the expiry of the one year by filing Form H. 

3. You will not earn any interest on fresh deposits after 15 years if you fail to submit Form H. 

4. Also, you will not be able to enjoy the income tax benefit under Section 80C if you don't inform your decision to extend the account to the Account officer via Form H

5. Even if you take an extension of 5 years for fresh deposits, you can stop making such contributions in future extensions. 

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6. You can also keep the account open after 15 years and chose not to make fresh contributions. In this case, you don't need to inform the Account Office as the account that is not closed after 15 years is considered to be extended automatically. 

You balance will keep earning interest for the next five years. However, you will not be able to make fresh contributions in future.