When one can withdraw money from PPF account?

PPF is a 15 year account in which one can put every year some amount upto a limit of Rs 150000. At the end of the year applicable interest is applied and added to the account. So the amount gets accumulating like that year on year.

Now there are some rules for partial withdrawals only from 7th year onwards. The rule says that you can withdraw the 50% of the balance standing in the account at the end of 3rd year and so on. Only one withdrawal is allowed in each year.

There are sites in the internet where example tables are given for the amount which can be withdrawn starting from 7th year. One such site is www.ppfcalculators.com where you can see the calculations done for the same.

PPF account gets matured in 15 years but one can renew it for further blocks of 5 years each. Many people prefer to keep the PPF account live as the interest earned on this account is tax free.

PPF account is a good method of saving money and to get some tax rebates.
The PPF interest rates are notified by the government from time to time.
Rs.1.5 lakhs is the maximum amount one can invest per annum in this account.
The PPF withdrawal rules:
The account holder will be allowed to withdraw only 50% of the accumulated amount by the 5th year of investment.
If the account is 7 to 12 years old, higher percentage withdrawals are allowed. Account holders can apply for a partial withdrawal using Form C in the bank where the PPF account is being maintained by him.
After 15 years, the account holders will be eligible for complete withdrawals. In case the account holder wants to continue the account after 15 years he can do so by renewing the account for another 5 years. If the account holder demises before 15 years completion after opening the account, the account will be closed premature. There is no chance for a living account holder to close his account before 15 years.

PPF ( Public provident fund) is one the ways to invest your money and exempt from income tax.

Below are features which one get after opening a PPF account :

# 8% interest rate on your savings and tax benefits.
# Long term investment for 15 years. You may deposit minimum of 500 Rs and maximum of 150000 Rs in a year.
# One can take loan from 3rd to 6th financial year as per your amount deposited in the account.
# Partial withdrawal can be done after 7 years of your opening an account.

One cannot withdraw the full amount deposited before 15 years so you will have to wait for 15 years though you can withdraw partial amount from your account.

PPF is one of the most popular scheme for savings where one can deposit amount time to time limited to a maximum of Rs 1,50,000 per year.

This has an initial period of 15 years which can be extended further for 5 years multiple times.

As the rate of interest is good (about 8%) many people go for it. The added attractions are IT rebate and tax free interest. It is known as best of all the worlds investment.

There is loan facility also from 3rd year onwards. As regards the withdrawal you can not withdraw before the 7th year and that also only the 50% of the balance as on four years back. So from withdrawal point of view it is not very interesting scheme. However after 15 years one can withdraw the full amount.

Anyway, keeping the PPF account active for long time makes sense in view of so many advantages.

PPF is a long term investment scheme and for the same reason withdrawal or closure of PPF account is not so easy. Usually PPF account is opened in order to generate long term corpus fund for education, marriage of children. I said corpus because the interest earned on PPF is not paid to you and gets reinvested and hence compounding factors comes into play. One can definitely generate good amount from PPF account if regular deposit every year is made to the PPF account.

Now there are two options for you to either withdraw or close the PPF account.
Withdrawal is possible only after completion of seventh year from the date of opening of account and that too only 50% of the amount standing in your account. Withdrawal allowed only once in each fiscal year after that.

Now there has been a change in PPF rules and premature closure of account is possible only in few conditions viz.
For medical emergencies
For education purpose

However there a premature closure is also applicable only after completion of 5 yeras from date of opening of PPF account.

Also there will be a penalty interest of 1% on premature closure of PPF account. It means you will be paid 1% less interest from the fund you are to receive on premature closure.

My personal opinion that PPF should be carried on till maturity and withdraw only in case of emergency and not otherwise.