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Check PPF Rules For Premature Closure And Partial Withdrawal

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The Public Provident Fund (PPF) is one of the most common saving instruments provided by banks to create long-term capital. Before the completion of the maturity tenure of 15 years, PPF allows you to make partial withdrawals. In certain cases, the PPF account holder can also request for premature closure. But PPF has set certain rules for premature closure and partial withdrawal which you need to consider. So let's have a look.

 

Rules set for partial withdrawal

Usually, withdrawals can be made within the 15 year maturity period from the account opening date. Partial withdrawals can, however, be made at the end of the 6th year from the date on which the account has been issued. In case of any serious illness or educational needs, a member can also request for premature closure of the PPF account. PPF also enables holders to make one withdrawal annually from the beginning of the seventh fiscal year. The amount to be withdrawn would be lower than:

  • 50 per cent of the balance immediately preceding the withdrawal year at the end of the fourth fiscal year
  • 50 per cent of the balance at the completion of the preceding year.

Check PPF Rules For Premature Closure And Partial Withdrawal

Rules set for premature closure

The PPF account can also be closed before the maturity date. After five years from the end of the year in which the PPF account was opened or before the maturity date, premature closure is permitted. From the date of account opening on premature closure, there is a penalty of 1 per cent interest charge. PPF account can be closed in case of serious health circumstances. Apart from this, premature closure is also allowed in case an investor needs higher education in India or abroad.

Tax on withdrawal

PPF withdrawals are exempt from taxation, either partially or in whole. If you make bank deposits, you are taxed on the interest received from them. In fact, the post-tax yields in other instruments would drop significantly, making the PPF a strong investment alternative relative to other choices in the same segment.

Goodreturns.in

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