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Public Provident Fund (PPF) is an investment for a period of 15 years. However, if needed, you can withdraw money from PPF even before maturity. What are the rules for pre-mature withdrawal from PPF?
Withdrawing from PPF means premature withdrawal, There is a 15-year lock-in in the PPF account. You can invest up to 1.5 lakh rupees per year in it. You can take advantage of tax exemption under section 80C on this amount. The entire amount received at the time of maturity is tax-free. Currently, this scheme pays an annual interest of 7.1%. The government reviews the interest of small savings schemes on a quarterly basis.
When can you withdraw money?
If you have saved a good amount in PPF and need money urgently and there is no way other than a personal loan then you can withdraw money from PPF. . For this, you will have to state a valid reason. You can withdraw money from the PPF account for children’s education, your treatment or of any family member. This facility will be available after 6 years, i.e., from the seventh year of investment onwards. But you cannot withdraw the entire amount. You can only withdraw only 50 percent of the balance remaining at the end of the four years prior to withdrawal year. Or you can withdraw 50 percent of the total amount deposited in the account at the time of withdrawal. You can only withdraw the amount which is lower in either of these two options.
Now let’s understand if you can close your PPF account before the tenure of 15 years?
In some cases, you can close your PPF account after five years. If the account holder himself, of his spouse or his child is suffering from a life-threatening disease, then for treatment, you can withdraw the entire amount and close your PPF account prematurely. Similarly, if the account holder or his children need money for higher education, he can close the account. If the account holder has settled abroad i.e., he has become an NRI, then this account can be closed prematurely. One percent interest will be deducted when closing an account prematurely.
If the account holder dies before maturity of the PPF account, then his nominee can withdraw money. In such a case, even the condition of completing five years of the account is also eliminated. After the death of the account holder, his PPF account will be closed. The money is given to the nominee or legal heir. Such accounts cannot be continued.