PPF Withdrawal Rule
What is the Public Provident Fund (PPF) Scheme?
PPF stands for Public Provident Fund. It is a long-term savings and investment scheme introduced by the Government of India. The PPF is primarily aimed at providing individuals with a secure and tax-efficient avenue to accumulate wealth for their retirement.
It also offers attractive interest rates, tax benefits, and a fixed lock-in period of 15 years. The contributions made to a PPF account are eligible for tax deductions, and the interest earned and withdrawals are tax-exempt. The PPF scheme is regulated by the Ministry of Finance and is available through designated banks and post offices across India.
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PPF Withdrawal Rule in 2023
There are various reasons why individuals may choose to withdraw money from their PPF account. Usually people opt for withdrawal due to educational expenses, medical expenses, debt repayment or urgent financial needs etc.
It is important to remember that PPF accounts are primarily meant for long-term savings and retirement planning. Therefore, ppf account has a specific withdrawal method keeping in mind the future financial goals. PPF Withdrawal Rules are discussed in detail below:
- Lock-in Period:
PPF has a mandatory lock-in period of 15 years. After completion of 15 years, the account holder has the option to withdraw the entire balance or extend the account in blocks of 5 years.
- Partial Withdrawal:
Partial withdrawal is allowed from 7 years after opening ppf account. In other words, withdrawals can be made starting from the beginning of the 8th financial year.
- Maximum Withdrawal Limit:
The lower of the two points below is the maximum amount you can be withdrawn per financial year. They are:
(1) 50% of the account balance as at the end of the last financial year (year before the current year).
(ii) 50% of the account balance at the end of the 4th financial year. - Number of Partial Withdrawals:
Only one partial withdrawal is allowed per financial year. In subsequent years, after the initial partial withdrawal, the account holder can make additional partial withdrawals as per the specified limit and conditions.
- Reasons for Withdrawal:
Partial withdrawals can be made for specific reasons, such as medical emergencies, higher education expenses, or housing loan repayments.
- Documentation:
The account holder has to submit a written application to the bank or post office where the PPF account is held. Mention the purpose of withdrawal and the desired amount in the application form. Withdrawal requests may require supporting documentation (eg medical bills, fee receipts etc).
- Tax Implications:
Partial money withdrawal from PPF account is tax free. The PPF scheme falls under the Exempt-Exempt-Exempt (EEE) category. Which means contributions, interest earned and withdrawals are all tax free.
To visit official PPF site….
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Question – Answer :
The maximum amount that can be deposited in a PPF account in a financial year is ₹1.5 lakh
Yes, investing in a PPF can be a good idea for many individuals. PPF offers several advantages, including, Tax Benefits, Guaranteed Returns & Security.
The Public Provident Fund (PPF) is generally considered a low-risk investment option.
PPF has some potential disadvantages. There are two main disadvantages to consider:
Mandatory lock-in period of PPF is 15 years. This means that the account cannot be fully withdrawn before the age of 15 years.
The maximum amount that can be deposited in a PPF account in a financial year is ₹1.5 lakh
in April 1, 2023, to March 31, Interest rate of ppf is 2024: 6.4%
