PPF after 15 years: extend with deposits, without, or close?

Maturity is a choice, not an end date

A PPF account runs for 15 full financial years after the year it was opened. When that ends, many people close it because they think they must. They do not. The account can run on in blocks of five years, with or without new deposits, and the interest stays tax-free. The PPF guide calls the 15-year term a floor, not a ceiling.

The decision at maturity is really three decisions: whether to keep the money in, whether to keep putting more in, and how you will want to take it out. The two kinds of extension answer the last question very differently.

The three options

• Close. Withdraw the full balance, tax-free.
• Extend without deposits. Do nothing and the account carries on by default. No further deposits are allowed in that block, the balance earns the notified rate, and you can withdraw any amount once a financial year.
• Extend with deposits. Apply at the post office or bank within one year of maturity. You keep depositing up to ₹1.5 lakh a year, and withdrawals during the five-year block are capped at 60% of the balance at the start of the block, at most one a year. Deposits made without that application are irregular: India Post's PPF rules say they earn no interest.

What each choice does to the corpus

Take someone who deposited the full ₹1.5 lakh at the start of every year for 15 years. At 7.1%, the rate notified for the October–December quarter of FY 2026-27, held constant, the account matures at ₹40.68 lakh on ₹22.5 lakh deposited. These figures use the PPF calculator's method: deposits at the start of each year, interest compounded yearly.

Two things stand out. First, the old balance does most of the work. In the first five-year block, the ₹40.68 lakh alone earns ₹16.64 lakh of interest. Adding ₹7.5 lakh of fresh deposits raises the block's interest only to ₹18.40 lakh. Second, the gap between the two rows widens with time, because each extra deposit also compounds: by year 30 the account with deposits is ₹40.7 lakh ahead, on ₹22.5 lakh more paid in.

The rate will not stay at 7.1% for 15 years; the government notifies it every quarter. A lower rate shrinks every figure above, but it does not change the ranking.

What each choice does to withdrawals

This is where the two extensions really differ.

Without deposits, the account behaves like a tax-free income fund. You can take one withdrawal a year of any size. Drawing ₹5.43 lakh at the start of each year would run the ₹40.68 lakh balance down to zero in exactly 10 years. Taking only the interest, about ₹2.89 lakh a year at 7.1%, leaves the capital intact for as long as the account runs. Unlike SWP withdrawals from a mutual fund, none of it is taxed.

With deposits, access is rationed. Over the whole five-year block you can take out at most 60% of the opening ₹40.68 lakh, that is ₹24.41 lakh, in no more than one withdrawal a year. Spread evenly, that is ₹4.88 lakh a year. If you also keep depositing ₹1.5 lakh a year, the balance after five years is ₹36.46 lakh, against ₹27.20 lakh for the same withdrawals with no deposits. Under the old tax regime the deposit still earns its deduction within the ₹1.5 lakh limit (section 80C under the old Act); the section 80C calculator shows what that is worth. Under the new regime it earns nothing.

The choice is made once per block. Someone who extends without deposits cannot start depositing again until the next five-year block, and someone who chooses deposits accepts the 60% cap for those five years.

Who each option suits

• Close if the money has a job now, such as a home down payment or a child's fees, or if you are about to become a non-resident: an account opened while resident runs to maturity but cannot be extended, as our post on NRI taxation notes.
• Extend without deposits if you want the money to keep compounding but need to reach it freely. For someone near retirement this is a tax-free bucket that sits alongside the Senior Citizen Savings Scheme and a mutual fund withdrawal plan; the order in which to draw them is the subject of retirement withdrawal order.
• Extend with deposits if you are still earning, still want a guaranteed, tax-free part in the portfolio, and do not expect to need more than 60% of the balance in the next five years.

How 7.1% tax-free compares

The tax-free status is what makes an extension worth having. A taxable investment has to earn 10.32% before tax to match 7.1% at the 30% slab (31.2% with cess), 8.96% at the 20% slab and 7.49% at 5%. A fixed deposit rarely clears the first of those hurdles. An equity fund can, over long periods, with volatility PPF does not have; PPF vs mutual funds and ELSS vs PPF set the two side by side. For most people the answer is not one or the other but how much of each, which our guide on asset allocation covers.

A short checklist at maturity

1. Note the maturity date. The one-year window to apply for an extension with deposits starts there.
2. Decide whether you will need more than 60% of the balance in the next five years. If yes, extend without deposits.
3. If extending with deposits, submit the application before making the first deposit.
4. Deposit before the 5th of April, as before: interest is still calculated on the lowest balance between the 5th and the end of each month.

The rate of 7.1% is assumed constant for illustration and is revised quarterly. Extension and withdrawal rules are set by the PPF Scheme and can change; check with your post office or bank before acting. None of this is a recommendation.