A Public Provident Fund (PPF) is a popular savings scheme in India that offers attractive interest rates and tax benefits. The PPF scheme is administered by the government and is designed to encourage individuals to save for their retirement. However, it is important to understand the withdrawal rules and options available under the scheme to make the most of your PPF investment.
Withdrawal Rules
The PPF scheme has a lock-in period of 15 years. During this period, withdrawals are not permitted except in certain specific cases. After the end of the 15-year lock-in period, investors can withdraw their entire balance or extend the account for a further period of five years.
Partial Withdrawal
After the end of the sixth financial year from the date of opening the account, investors are allowed to make partial withdrawals. The amount of partial withdrawal cannot exceed 50% of the balance at the end of the fourth financial year preceding the year in which the withdrawal is made or the balance at the end of the preceding year, whichever is lower.
Withdrawal for Higher Education
PPF account holders can make a partial withdrawal for higher education of either themselves or their children. The withdrawal can be made after the end of the fifth financial year from the date of opening the account, and the amount cannot exceed 50% of the balance at the end of the preceding year.
Withdrawal for Medical Expenses
PPF account holders can make a partial withdrawal for medical expenses of either themselves or their family members. The withdrawal can be made after the end of the fifth financial year from the date of opening the account, and the amount cannot exceed 50% of the balance at the end of the preceding year.
Withdrawal on Account of Disability or Death
In case of disability or death of the PPF account holder, the nominee or legal heir can make a partial withdrawal from the account. There is no limit on the amount that can be withdrawn in such cases.
Options Available
Withdrawal is not the only option available to PPF account holders. There are several other options available under the scheme that can help investors make the most of their PPF investment.
Extension of Account
After the end of the 15-year lock-in period, investors can extend their PPF account for a further period of five years. During this period, investors can continue to earn interest on their balance without making any fresh deposits. However, investors cannot make any further withdrawals during this period.
Loans Against PPF
PPF account holders can avail loans against their balance after the end of the third financial year from the date of opening the account. The loan amount cannot exceed 25% of the balance at the end of the preceding year. The loan must be repaid within 36 months and carries an interest rate of 2% higher than the prevailing PPF interest rate.
Premature Closure
PPF accounts cannot be closed prematurely except in case of the death of the account holder. However, in certain exceptional circumstances such as serious illness, the government may permit premature closure of the account.
PPF Calculator
A PPF calculator is an online tool that helps individuals calculate the maturity amount of their Public Provident Fund (PPF) investment. It takes into account the amount invested, the duration of the investment, and the prevailing interest rates to give an estimate of the maturity amount.
Conclusion
The PPF scheme is a great savings option for individuals who want to build a corpus for their retirement. However, it is important to understand the withdrawal rules and options available under the scheme to make the most of your investment. While partial withdrawals are allowed under certain circumstances, it is advisable to avoid making withdrawals and instead opt for options such as extension of the account or loans against PPF. By taking advantage of the various options available under the scheme, investors can maximize their returns and ensure a secure and comfortable retirement.