This PPF government backed scheme is a variant of a small savings policy. Its maturity period is 15 years. However, under certain conditions and rules, the amount of PPF can be withdrawn even before that.
New Delhi. Public Provident Fund is one of the most popular retirement savings schemes. Every year lakhs of people invest in this scheme. Almost anyone can invest in this government-backed scheme with an annual contribution of a minimum of Rs 500 and a maximum of Rs 1,50,000. PPF is one of the few government-backed savings schemes that offer tax savings. Your PPF contribution, interest earned and maturity amount is exempt from tax under Section 80C of the IT Act.
This government-backed scheme is a variant of a small savings policy and it has assured returns at the time of maturity. That’s why it is so popular among investors. PPF currently offers an interest rate of 7.1 per cent per annum. This is one of the highest interest rates among risk free savings schemes after EPF. PPF account holders can also take a loan on their account at only 1% annual interest under certain conditions.
The maturity period of PPF account is 15 years. But under specific rules, you can close the account by prematurely withdrawing your amount. If you also want to withdraw money from PPF prematurely, then you should know about these five rules given below.
- The maturity of PPF account is 15 years, but you can withdraw the amount even earlier. However, for this you will have to wait for at least 5 years. For example, if you opened a PPF account in January 2022, then you have to wait for 2027 for premature withdrawal. However, there is another condition in this.
- The method of counting five years does not include the year of account opening. That is, if you open an account in 2022, you will have to wait for 2028, not 2027. As per the guidelines of India Post, the investor can avail this withdrawal only once after 5 years.
- Also, you cannot withdraw the entire amount in your account before 15 years. This means that you can withdraw the amount anytime between 5 to 14 years but you will not get 100% of the amount present in the account at that time.
- Up to 50 percent of the account amount can be withdrawn in the fifth year.
- 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.