The Public Provident Fund is one of the best investment tools for investors who are looking for good returns in long run. This was introduced the vision to mobilize small-scale savings in order to promote savings and offer decent returns on them. The PPF scheme is a combination of investment and tax-saving tools that helps to create wealth and corpus that can be utilized in the future to overcome financial commitments and needs. This article will help investors to gain a better understanding of the PPF withdrawal rules.
GUIDELINES AND RULES OF PPF
PPF comes with stringent terms and conditions which are binding on the investors. Following are the key guidelines and rules of PPF account:
- PPF account has a tenure of 15 years.
- Complete or partial withdrawal of funds is possible only after the completion of 15 years.
- Premature closure in case of a medical emergency after 5 years.
COMPLETE WITHDRAWAL OF PPF ACCOUNT
At the end of the maturity tenure i.e. 15 years, investors can close their PPF account and withdraw the deposits. To close the account, you will have to fill Form C and submit the same to your nearest post office branch where you are maintaining the PPF account.
EXTENSION OF PPF ACCOUNT WITH CONTRIBUTIONS
If investors are willing to keep their account active and continue to make contributions to it, they can go for a block extension. One block is for 5 years and investors have the choice of keeping the account open with or without contributions after the maturity period. This extension application is to be made in form 15 H within 1 year of the account’s maturity period. During this 5 year extension, investors are granted one withdrawal every year but they can’t withdraw more than 60% of the corpus. It should also be noted that Deposits made after maturity will not generate any interest nd won’t be eligible for deductions u/s 80C of the Income Tax act 1961, if you opt to make deposits without submitting form H.
EXTENSION OF PPF ACCOUNT WITHOUT ANY CONTRIBUTIONS
Investors can opt to leave the account open for as long as they want without making any additional contributions in case they don’t wish to close the account. Interest will continue to be paid on the balance until it is closed. Each financial year, investors are offered one withdrawal. Nevertheless, there is no limit on the withdrawal amount.
PREMATURE CLOSURE OF PPF ACCOUNT
Investors can close a PPF account after 5 yrs from the end of the year in which such an account was opened. In case of premature closure of the PPF account, investors face a 1% reduction in interest. They can close an account only under the following circumstances:
- A life-threatening ailment of a spouse, self, or dependent children.
- To meet the costs of higher education of self or dependent children.
- Change in residency.
PROCESS OF PARTIAL OR COMPLETE WITHDRAWAL OF PPF ACCOUNT
- Investors will need to fill up Form C.
- Some of the needful details required are: PPF account number, amount willing to withdraw, how many years have completed since opening.
- Now you will need to submit the PPF passbook.
- The bank will check the eligibility and all the necessary details of the account holder for the withdrawal.
- Individuals can get a DD (Demand Draft) for the corpus amount or it can get credited to the savings account.
PPF WITHDRAWAL TAXABILITY
As discussed, PPF falls under EEE (Exempt-Exempt-Exempt) category. So, all deposits made under PPF are exempt from taxation. Further, the interest applicable and the accumulated corpus is also tax-free at the time of withdrawal.
1. Can we withdraw the amount from PPF online?
Yes, PPF offers the facility of online withdrawals. You can simply visit the official website of the respective bank and apply for withdrawal by following the needful process.
2. Can we withdraw PPF after 5 years?
Yes, you can do PPF withdrawals after 5 years but up to half of the balance in the PPF account after completion of 5 years from the end of the year in which the account was opened.
3. Can we close the account after 5 years?
Yes, premature closure is allowed after 5 years.
4. Can anyone withdraw money before maturity?
Yes, PPF offers an option of partial withdrawal. Investors are allowed to withdraw up to 50% of the balance in PPF after the completion of 5 years.