The Government Of India has launched various schemes to benefit the working class. One such scheme is the Public Provident Fund (PPF). Under this scheme, people can put some part of their salary into this fund. The money that you put in this fund is tax-free and also no tax is levied on the interest that you get on these savings. By the time you retire, a big amount is available in your fund which will make sure that you won’t struggle financially later on.
This fund money can be withdrawn only after you retire. However, partial withdrawal is allowed in some situations. There are clear rules by the government for such partial PPF withdrawals.
The PPF account is similar to EPF account. It accumulates the money that you save and also the regular interest that you get on that. This interest rate is continuously updated by the government. The current interest rate for PPF is 7.8% (since July 2017). You can use a PPF calculator to determine the approximate maturity amount. You can rest assured that the corpus amount would be large.
A PPF account can be opened in private banks as well. The maximum amount that you can deposit into this fund per year is Rs 1,50,000 and the minimum amount is Rs 500. You can put this money at once or in 12 installments also.
The Rules For PPF Withdrawal
- You are allowed to withdraw the full amount in your PPF only after 15 fiscal years. Many get confused between fiscal year and their actual 15 years of opening their account. For example, if you open your PPF account on October 2017, then you will think that the account will mature on October 2032. But it actually matures on 1st April 2033 as it is the fiscal year ending.The fiscal year is from April to March in India.
- Only in cases of emergency like your child’s education, marriage, and medical issue’s you will be allowed to withdraw a partial amount from PPF account.
- You will not be allowed to close this account prematurely unless the account holder meets with death.
- You can also check the status of your PPF withdrawal through internet banking. If your accounts are linked to the post office, then you have to file a request in your registered branch to know the status of your PPF withdrawal.
The Rules For Partial PPF Withdrawal
- A partial withdrawal from PPF account can only be made after completing 7th fiscal (financial) year from when your account was created.
- You can only make one partial withdrawal ever 7 fiscal years.
- You can either withdraw 50% of the amount you saved until the end of the 3rd year or until the end of 6th year.
When your PPF account becomes 15 years old (reaching maturity), there are 3 options:
1] Close Your Account
- You can easily withdraw all the amount from your PPF account and close it immediately. Therefore, you won’t have to make any further contributions to this account.
- If you don’t want the amount in bulk, then you can also withdraw that amount in installments. But the maximum number of installments will be 12 i.e. for 1 year only.
- If you do not close this account, then it will be automatically extended for 5 more years without your contribution. You will still be able to earn interest on the amount that is present in this account.
- But in case you want to open a new account, then you will have to close the old account.
2] Continue your account for 5 years more without the contribution
- You do have the option of continuing your existing account without withdrawing funds. You will keep earning interest on the amount without your contribution.
- This is the default process that takes place when you don’t close your account after maturity.
- You won’t be able to contribute any amount to this account type after it matures. Also, this becomes permanent if you do not choose any other option within 1st year after the account matures.
- The total amount in your PPF account can be withdrawn at any moment in these 5 years.
3] Keep contributing to this account for 5 extra years
- You have to select this option if you want to keep contributing to your PPF account even after it matures. To do this, you need to fill Form H which will be available at the bank or the post office where you have opened this account.
- You have to submit this form before your account gets 1 year old after maturity. If you d not do this, then you will be able to extend your account for 4 more years but won’t be able to contribute to it.
- Once your application is approved, you will be able to keep contributing to your account and earn the interest rate for 5 more years.
Remember: If you haven’t filled this form but you keep contributing to this account after maturity, then the amount will not get any tax benefits and it won’t ear you any interest rate also.
All Forms For PPF
|Form A||Fill this for opening your PPF account|
|Form B||This is used for depositing fund or repaying loan|
|Form C||This is form for partial withdrawal request|
|Form D||This is form for PPF loan request|
|Form E||Use Form E for adding PPF nominee|
|Form F||Use form F when you want to change nomination for the account|
|Form G||This is used for settling claims i.e. in case of account holder’s death|
|Form H||Form H used for extension of term period after maturity|
Banks authorized for creating PPF accounts:
- SBI and its subsidiaries
- ICICI bank
- Union Bank of India
- Vijaya Bank
- Allahabad Bank
- Oriental Bank of Commerce
- Bank of Maharashtra
- Canara Bank
- Punjab National Bank
- United Bank of India
- Axis Bank
- Indian Overseas Bank
- Indian Bank
- Corporation Bank
- Dena Bank
- Bank of Baroda
- Central Bank of India
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