PPF Update: Public Provident Fund is one of the most popular retirement savings schemes, with lakhs of people investing in this scheme every year. Almost everyone can access the government-backed high yield scheme with an annual contribution of a minimum of Rs 500 and a maximum of Rs 1,50,000. PPF is one of the very few tax-exempt schemes covered under EEE (Exempt, Exempt, Exempt) of the government. that means your PPF ContributionThe interest earned and the maturity amount are exempt from tax under section 80C of the IT Act.
This government-backed scheme is a variant of a small savings policy and it ensures to provide assured returns at the time of maturity, which makes it so loved among investors. PPF Currently offering quarterly compound interest rate of 7.1 per cent per annum. It has one of the highest interest rates after EPF, which is available for risk free savings. PPF account holders can also take a loan on their account at only 1% interest per annum, subject to certain conditions.
The maturity period of a PPF account is 15 years, but you can access your contributions and also close your account prematurely, subject to specific rules. Read on to know the rules related to premature withdrawal from PPF.
Here are 5 rules to know about PPF premature withdrawal:
I. Premature withdrawal from PPF account is allowed only after five years of account opening and activation. For example, if you open a PPF account in January 2022, you will be able to withdraw money during the financial year 2027-28.
ii. You cannot withdraw all your money from your PPF account until the account matures after 15 years. This means that premature withdrawals cannot be 100% of your PPF account balance at any point in time.
iii. A customer can avail only one withdrawal during the financial period after five years except in the year of account opening. This means that if the account was opened during 2020-21, withdrawals can be made during or after 2026-27, as per the guidelines of India Post.
iv. The amount of withdrawal can be taken up to 50 per cent of the balance on credit at the end of the preceding fourth year or at the end of the previous year, whichever is less. This means that in the financial year 2022-23, up to 50 per cent of the balance amount as on 31 March 2019 or 31 March 2022, whichever is less, can be withdrawn.
v. Since PPF is a tax-free scheme, you do not have to pay any tax during premature withdrawal. There is no charge even for premature withdrawal from your PPF account.
The PPF account can be closed prematurely under specific conditions and after following a set of rules.
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