Public Provident Fund (PPF) is one of the most popular long-term investment vehicles for risk-averse investors. People prefer PPF over MF or other long-term investment instruments because the contribution, interest earned and the maturity<!--more--. amount is completely tax exempt. It is advised not to close the PPF account prematurely until there is a serious emergency.
The rate of interest is determined by the central government on a quarterly basis. At present, the rate of return is 8.0% per annum. Interest is calculated on the minimum balance(in PPF Account) between 5th day and end of the month and is paid on 31st March every year.
Note that the PPF lock-in period is 15 years. The amount deposited in the account can be withdrawn only after maturity. However, in some circumstances, withdrawal is allowed before the completion of this period. Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the PPF any amount from Rs 500 to Rs 1,50,000 in a financial year.
Here's all you need to about PPF money withdrawal:
Premature payment from PPF is allowed only after the account has completed five financial years, where:
a) The amount is required for the treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children or parents, on the production of supporting documents from a competent medical authority.
b) That the amount is required for the higher education of the account holder or the minor account holder, on the production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India & abroad.
Form C is available at the post office or bank where the PPF account has been opened. The account number and the amount to be withdrawn must be mentioned in the application form along with the sign of the account holder. Also, the form must also have a revenue stamp.
Any time after the expiry of five years from the end of the year in which the initial subscription was made, a subscriber may apply in Form C or as near thereto as possible, together with his passbook to the Accounts Office withdrawing from the balance to his credit, an amount not over 50 per cent of the amount in his account the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower.
Not more than one withdrawal is permissible during any one year. On receipt of an application, the Accounts Office may permit the withdrawal and enter the amount withdrawn in the passbook after satisfying that the amount of withdrawal applied for is not in excess of the limit prescribed. The AO has to also ensure that the applicant has, till the date of application, been subscribing according to the limit specified in the scheme.
