PPF refers for Public Provident Fund is the well-known and old scheme of Government of India under the PPF act of 1968. It is a long term small saving scheme for the citizens of India which is supported by Government. The main reason for launching this scheme is that Government wanted to give financial security to individuals who were self-employed and worked in an unorganized sector after retirement period. Today it is one of the popular investment schemes under 80C of Income tax. The rate of interest of PPF has been decided by the Government every year. If you are looking for any long term investment option, having the decent and safe return, along with tax benefits then PPF scheme is the right choice for you. You should deposit vary amount as per your convenience every year in PPF account. As per the last notification, the minimum and maximum amount one can invest every year in PPF is Rs 500 and Rs 150000 respectively.
PPF withdrawal Criteria
PPF is well-organised long term Investment Avenue where your money is blocked for 15 years. If you need money urgently, you can select the partially withdrawn option but this is possible only after five financial years of Investment. This five year period is calculated from the end of the first financial year of Investment, therefore indirectly you can withdraw the partial amount in the seventh year.
There is also one condition related to partial withdrawal amount. The maximum limit of partial amount. The amount which can be withdrawn partially is lower of the following cases:
- 50% of account balance at the end of Fourth financial year, immediately preceding the current year OR
- 50% of the account balance at the end of financial year ending, immediately preceding the current year
The PPF withdrawal method can be understood more clearly with the following example.
If any individual opens his PPF account in January 2016, then the maturity period is 15 years. This maturity period is calculated from the end of the first financial year when you opened the PPF account. Therefore, in this case, 15 year period starts from 31st March 2016. The locking period will be until 31st March 2031. The full amount can be withdrawn only from 1st April 2031.
Further after 15 years of maturity options, you have following two options:
- Take the full maturity amount and close the PPF account
- You can continue the existing PPF account for the next 5 years and made the investment yearly as you have been. After expiry of this 5 years, this can be further extended for next five years. There is no such limit on the number of 5 years extensions.
However, if you want to make the partial withdrawal from your PPF account, it will only be possible from 1st April 2021.