Tax Query: PPF account can be extended further in blocks of 5 years

My father has a PPF account in the post office which was extended for five years after completion of 15 years. So, a total of 20 years is going to complete in March 2020. When I approached them for an extension of another five years, they refused. Personnel from India Post told me that the PPF account can only be extended for a period of five years only once. Beyond that, the account cannot be extended as per India Post rule. Kindly clarify whether I can extend it or not.

There is no such restriction on the extension of the maturity period of a PPF account. The tenure is 15 years and the same can be extended within one year of maturity for another five years and so on. You can also retain the maturity value without extension and without further deposits. You can go to any branch of India Post and get your PPF account extended for a tenure of five more years.

My last Provident Fund (PF) contribution was in February 2014. Afterwards, I went abroad for one and a half years and became self-employed. I was born in June 1961. I have not withdrawn from my PF account so far. I have recently turned 58. Please let me know if I can keep the funds in PF and keep receiving interest or will I have to withdraw the fund?

According to the present rules of the Employees’ Provident Fund Organisation (EPFO), one can withdraw the entire PF balance after their retirement or after active employment. The purpose of such restriction is because PF is meant for long-term retirement planning. The minimum retirement age is 55 years for the purpose of withdrawal. Since you have already completed 58 years of age, you can withdraw the whole corpus. In case, you had completed five years of continuous service with your employer, your PF corpus would have enjoyed a tax exemption on the withdrawal. However, such exemption is limited to the corpus accumulated until the continuous period of service. As you have not contributed to the PF account since February 2014, the amount accrued post such period will not be entitled to any tax exemption and would be added to your taxable income and taxed accordingly.

For any clarifications/feedback on the topic, please contact the writer at komal.chawla@cleartax.in