PPF WITHDRAWAL RULES

Public P­rovident Fund (PPF), being the risk-free investment was introduced in the year 1998 and is considered as one of the most popular long-term saving scheme which usually focuses on inducing small savings like investments and accure returns on the same.

Termed as a “Government-backed savings-cum-tax saving scheme” under PPF, an individual can invest in it with an annual contribution of a minimum of Rs.500 and a maximum of Rs.1,50,000. Public Provident Fund has a maturity period of 15 years after which an individual can easily withdraw funds from his or her PF Account. In some of the special cases, partial withdrawal is allowed. However, only under special circumstances.

Continue reading to know everything about PPF Withdrawal-partial and complete, premature closure and extension of your PPF account after maturity.

To begin with PPF withdrawal on maturity then, in that case, the entire amount can be withdrawn on depositing a duly filed Form C at the bank branch or post office where you have your PPF account.

PPF Extension on Maturity

 In addition to it, where the PPF account is matured, an individual has an opportunity to either withdraw the complete amount or extend the term of the account in locks of 5 years. If an individual forgets to withdraw funds and close the account then, the account gets extended automatically. And further, earn an interest on the accumulated balance.

You can choose to extend your PPF account with or without contribution

PPF Extension without Contributions: This means, after maturity, you preserve your PPF account lively however do now not make any in additional deposits. Your general corpus will maintain income activity till you withdraw the whole amount.

PPF Extension with Contributions: After your PPF account reaches maturity, you can hold it energetic and proceed to make contributions to it. However, this is solely viable if you have submitted Form H to lengthen the PPF account, within one 12 months of the authentic maturity of the account. If you fail to publish Form H, you can’t make contributions in additional quantities to the PPF account. Any such contributions will be dealt with as irregular and will neither earn pastime nor get tax deduction underneath Section 80C.

PPF Withdrawal Rules after Extension

PPF Withdrawal after Extension without Contribution

After extending the account for a block of 5 years, you are eligible to withdraw an amount up to the balance in the account at the time of an extension. The condition being is that the withdrawal is possible only once in a year.

PPF Withdrawal after Extension with Contribution

After extending the account with contribution, you can only withdraw 60% of the balance accumulated at the time of extension over the fresh 5 year period. Withdrawal is possible only once a year.

Partial/Premature PPF Withdrawal

1. Partial withdrawal is possible in the 6^th  financial year after the account is opened.
2. There is no tax applicable on partial/premature withdrawals from the PPF account.
3. Only once in a year, partial withdrawal is allowed.

PPF Withdrawal Limit

The maximum amount that is possible to be withdrawn in a year is either 50% of the balance left at the end of the financial year, preceding the current year, or 50% of the balance left at the end of the 4^th financial year, preceding the current year, whichever is lower.

In the case where the partial withdrawal is made on April 1, 2017, the maximum amount that is allowed to be availed as the loan would be lower of :

Either 50% of the balance as on March 31, 2017 (the current financial year is 2017-2018 hence financial year immediately preceding the current financial year is 2016-2017 which ends on March 31, 2017 OR 50% of the balance as on March 31, 2014 (the current financial year is 2017-2018 hence 4^th financial year immediately preceding the current financial year is 2013-2014 which ends on March 31, 2014).

PPF Withdrawal Form filed

The “Form C” is the prescribed form which is required to be submitted to withdraw the partial amount from the PPF Account. Where the PPF account is in the name of the minor, an additional declaration is necessary to be submitted. In Form C, details such as account number, amount of money to be withdrawn etc. are required to be mentioned.

Withdrawal Process of PPF

Step 1: Download Form C

Step 2:  Enclose a copy of PPF passbook along with Form C

Step 3: Submit the same at your respective bank branch

Premature Closure

Only under certain circumstances, premature closure is possible. Where five years have elapsed since the opening of account. Here are the cases where an individual can close account prematurely.

Firstly, if the account holder, his/her spouse, parents, dependent children are afflicted with a life-threatening disease, then PPF account can be closed. For evidence, relevant supporting documents and medical reports shall be necessary to submit to verify the reasons.

Second, where an individual wants to go abroad for higher education, one can opt for premature closure. Only, the relevant documents are required such as fee receipt

Thirdly, where the residency address is changed, one can then definitely opt for premature closure of PPF Account.

In case of premature closer of PPF accounts, the account holder receives 1% lower interest than the prevailing rate.

Limitations under PPF

Some of the limitations of PPF are as follows:-

1. PPF has a lock-in period of 15 years. Lock-in period under PPF is considerably the longest as compared to other schemes. In case of emergency, this can be a big problematic thing.
2. Public Provident Fund interest rate is not very high as compared to the fact that it offers a long-term investment
3. Where a person wants to open a joint account then it shall not be possible in case of creating PPF account.
4. 1,50,000 is the maximum amount that can be invested in PPF account. In PPF only, there is limit. In ELSS or NPS or FD there exist no such limit. Although, the maximum tax benefit availed is same i.e. Rs. 1.5 Lakh as per Section 80C.
5. Resident individuals are eligible to open new PPF account but NRIs are not allowed to avail this feature.

 Tax Benefits on PPF

Amazingly, PPF withdrawal is fully exempt from tax. No matter, it is withdrawal on maturity or it is partial withdrawal before maturity, the tax is not chargeable.

Also, PPF is listed under the EEE (Exempt Exempt Exempt) category of tax implications.

As per Section 80C, investment up to Rs. 1,50,000 are exempted from tax.

Under PPF, the principal amount invested, the interest earned, maturity amount are exempt from taxes.

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