For the salaried class in India, the public provident fund (PPF) savings is their biggest security which they can fall back upon when they are no more in service. PPF is a central government's social security scheme for citizens, where they can invest for their retirement savings.
PPF scheme has a maturity of 15 years, after which the full amount withdrawal is allowed. However, under certain circumstances, the retirement corpus can also be withdrawn prematurely. Partial withdrawals are allowed before the account matures, but after the 6th financial year from account opening. But this can be done only under certain circumstances.
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About PPF scheme
PPF, part of small savings schemes, currently offers an interest rate of 7.1% per annum. The rate is reviewed on quarterly basis.
An investor can invest as low as Rs 500 and up to a maximum of Rs 1,50,000 per annum under the scheme.
Public provident fund scheme has an original duration of 15 years after which the amount matures and can be fully withdrawn.
After 15 years completion, on application by the subscriber, it can be extended for one or more blocks of five years each.
Loans and withdrawals are also permitted depending upon the age of the account and balances as on the specified dates.
Income tax benefits can also be availed for investing under the scheme. It is a risk-free as it is supported by the government.
Partial/Premature PPF withdrawal
Partial withdrawals from PPF account can be made from the sixth financial year after the account is opened.
For example, if the account was opened on February 1, 2020, a withdrawal can be made from the financial year 2025-26 onwards.
There is no tax on partial/premature withdrawals from the PPF account. Only one partial withdrawal is allowed per financial year.
How much can you withdraw before maturity?
The maximum amount that can be withdrawn per financial year is the lower of the following:
50% of the account balance as at the end of the financial year, preceding the current year, or
50% of the account balance as at the end of the 4th financial year, preceding the current year.
PPF partial withdrawal process
1. Download the PPF Withdrawal Form (Form C) from your bank's website online or you can get it from the bank branch. There are three sections of the PPF withdrawal form that you need to fill.
(a) Declaration section: Here you have to provide your PPF account number and the amount of money, which you wish to withdraw. Besides that, you need to specify for how many years the account has been active
(b) Office-use section: Here, you need to fill the details like date of account opening, current total balance, date of previous withdrawal (if any), total withdrawal made from the account, etc.
(c) Bank details section: Bank account number and other required details of the account in which the withdrawn amount should be credited
2. Enclose a copy of PPF passbook along with Form C.
3. Submit the same at your respective bank branch.
