Do I have to pay tax on my returns after I extended my PPF account for 10 years (2 blocks) or it is fully exempt?
-Lt Col P V C Subba Rao(Retd)
Your PPF accumulation will be completely tax free even after the extension. Public Provident Fund (PPF) is exempt-exempt-exempt (popularly known as 'EEE') for taxation. This means it is tax exempt at all 3 stages: investment, accrual and withdrawal. At the investment stage, the contributions to PPF account is eligible for tax deductions upto Rs 1.5 Lakh in a financial year. At the accrual stage, the interest accrued on the PPF account is not taxable and finally at the withdrawal stage, the amount accumulated is tax free. This rule applies at maturity and further blockwise extensions as well.
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