This government guaranteed scheme coming in EEE category can add a good amount of funds in the long term, and also saves tax in three ways. Investment in PPF, interest received on it and the amount received on maturity, all three are completely tax free.

A minimum of Rs 500 to Rs 1,50,000 can be invested annually in PPF. Currently, PPF is getting an interest rate of 7.1%. This scheme matures in 15 years, but if you want to take advantage of it further, you can extend it in blocks of 5 years each. Know here how many times PPF can be extended and what needs to be done to get an extension?

Know the rules of extension

In case of PPF extension, the investor has two options – first, account extension with contribution and second, account extension without investment. If you do not withdraw the amount after the maturity of 15 years, then your account gets extended automatically. The advantage of this is that whatever amount is deposited in your PPF account, you keep getting interest as per the calculation of PPF and tax exemption also remains applicable. Apart from this, you can withdraw any amount from this account anytime. If you want, you can even withdraw the entire amount. In this, you get the facility of FD and savings account.

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When does extension happen in 5-5 year blocks?

If you want to deposit a lot of money through PPF and want to extend the account with contribution, then in this case the account is extended in blocks of 5-5 years. You can get the account extended as many times as you need. But to extend the account with contribution, you will have to submit an application to the bank or post office where the account is.

You will have to submit this application before the completion of 1 year from the date of maturity and a form will have to be filled for extension. The form will be submitted in the same post office / bank branch where the PPF account has been opened. If you are unable to submit this form on time, then you will not be able to contribute to the account.

Remember these rules related to extensions

• The first condition is that PPF extension can be done only by citizens residing in India. Indian citizens who have taken citizenship of another country are not allowed to open a PPF account or extend an account if they already have one.
• For PPF extension, first of all you have to give an application to the bank or post office where you have an account. You have to give this application before the completion of 1 year from the date of maturity.
• If the term of the PPF account is extended for 5 years on your application, then you will have to deposit at least Rs 500 per year. If you do not deposit this minimum amount, your account will be closed. To restart it, you will have to pay a penalty of Rs 50 per year.
• After choosing the option of PPF Extension, you can withdraw money from your account only once a year. The withdrawal amount can be up to 60 percent of the amount you had till the maturity date.

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EEE means Exempt Exempt Exempt. There are three ways in which tax is saved in the schemes falling in this category. In this, there is no tax on the amount deposited every year, apart from this, there is no tax on the interest earned every year and the entire amount received at the time of maturity is also tax free i.e. investment, interest/return and maturity are tax free. There is savings. Know in which schemes you can avail this benefit-

Public Provident Fund (PPF)

PPF is a better option to save tax and invest in a safe place. Under this scheme, any investor can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakh in a year. Annual interest of 7.1 percent is available on PPF. The special thing about this scheme is that the investment money, interest received on the investment money and maturity amount are all tax free.

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Under this scheme the investor gets 8.2 percent interest. Under this scheme, any father can deposit Rs 250 to Rs 1.5 lakh annually in his daughter’s account. The money is deposited for 15 years and when the daughter turns 21, the entire amount along with interest is returned to the investor. To invest in this, the daughter’s age should be less than 10 years.

Equity Linked Savings Scheme (ELSS) is also called tax saving mutual funds. In equity linked saving schemes, you can deposit money in lump sum and can also do it through SIP. Its lock-in is for three years. After this you can withdraw money whenever you want or continue your investment. If you withdraw the amount after 3 years, you get tax benefits.

Employee Provident Plan (EPF)

If you are employed then you can also save your tax through EPF. EPF is also an EEE category scheme. At present 8.25 percent interest is given on it. In such a situation, you can add a good amount of money through this scheme. If you want, you can also increase your contribution through VPF.

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Public Provident Fund (PPF) is a safe investment scheme. Due to the excellent returns and tax savings, the number of people investing in PPF is increasing. The government is paying interest at the rate of 7.1 percent on the amount deposited in the PPF account. PPF account can be opened in post office or any bank branch.

A minimum of Rs 500 and a maximum of Rs 1,50,000 can be deposited in PPF account per year. This is the scheme of EEE category. This means that the amount deposited every year, the interest earned on this amount every year and the entire amount received at the time of maturity are tax free.

The lock-in period of PPF is 15 years. If money is needed, some amount can be withdrawn from the PPF account even before 15 years. If you want to withdraw money from the account before 15 years or want to close it, then for partial withdrawal you have to follow certain conditions. After 15 years, the entire amount deposited in the account can be withdrawn.

What is the rule of partial withdrawal

According to a media report, PPF account holders can withdraw 50% of the amount from the PPF account in the 7th year. Please tell that the PPF account is completely locked in for the first 6 years. If a person has to start investing in the financial year 2020-2021, then he can withdraw money only after 2025-2026 in case of emergency. You do not have to pay any tax even if you withdraw money before time. If the account holder dies before the maturity of the PPF account, then this condition of 7 years is not applicable to the nominee of the account holder. Nominee can withdraw money anytime.

You can also close the account earlier

In some circumstances, your PPF account can be closed before the end of the 15-year period. According to the PPF Withdrawal Rules 2021, the PPF account can be closed prematurely if the account holder or dependents have a life-threatening illness or need money for higher education. If it is closed before the maturity period, 1% interest is deducted from the date of opening till the date of closure.

How to withdraw money Form C has to be submitted for premature withdrawal of money from PPF account. This form is available in post office and bank. In the form, you have to fill the account number and the amount you want to withdraw. You have to submit the form along with the passbook. The amount will be deposited directly into your savings account, or you can take the same through demand draft.

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