The government recently allowed individuals to withdraw amount from PPF account as early as 5 years, on certain conditions such as serious ailments or higher education.
The interest rate on PPF is maintained at 8.1 per cent in the July-September quarter, the same as that in the quarter ending June 30, 2016.
"A subscriber shall be allowed premature closure of his account or account of a minor of whom he is the guardian on ground that amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children on production of supporting documents from competent medical authority," the Finance Ministry said in a notification.
Also allowance will be applicable to the requirement of higher education of the account holder or the minor account holder on production of documents and fee bills in confirmation of admission in a recognised institution in India or abroad, added further.
Public Provident Fund is a very popular scheme and allows you tax rebate under Sec 80C of the Income Tax Act, apart from tax exemption of the interest income. So, the entire interest component is subject to tax benefits, just like tax free bonds.
While earlier the government fixed the interest rate every year, it has now decided to align the rates to the GSEC rates. Accordingly, the interest rates on PPF would be revised every quarter. At the moment the PPF interest rate is 8.1 per cent, until Sept 30, 2016.
Earlier, partial withdrawals could be made after the 7th financial year after the creation of the account. Note that the "financial year" is considered from the 1st of April - to the 31st of March the next year.
In case of any serious ailments or life threatening disease the amount required should be submitted along with supporting documents from competent medical authority.
The amount required for higher education should be submitted along with fee bills in confirmation of admission in a recognized institute of higher education in India or abroad.