Public Provident Fund Scheme, popularly known as PPF is a retirement benefit scheme to mobilise small savings by investing Rs. 500 in the PPF account. A government-backed plan, PPF helps to get safe returns on investment along with tax benefits on the principal amount, PPF interest rate earned, and the amount received at the end of the maturity period.
Here is all you need to know about PPF rules for depositing and withdrawing funds.
Rules for opening account depositing money in a PPF account:
- To open a PPF account, you need to deposit a minimum of Rs. 500 in your PPF account.
- You can open a PPF account through any public/private sector banks and post office. Earlier you could open a PPF account in nationalised banks only.
- The minimum amount that you need to deposit every year is Rs. 500 and you can deposit up to Rs. 1.5 Lakhs in a financial year.
- Individuals can only open one PPF account in their name. However, you could open a PPF account in the name of minors as a guardian.
- There is no cap on the minimum and maximum amount that you could deposit in your PPF account every month. However, as the interest is calculated on the monthly balance of 5th of every month. You must deposit funds in your PPF account before 5th of every month to get better returns.
- Also, you could deposit money as a lump-sum payment or as EMI.
Rules for withdrawing money from PPF account: You can deposit money in your PPF accounts for a tenure of 15 years, which can further be extended in blocks of 5 years.
- Investors cannot withdraw the funds in PPF accounts before the tenure of 15 years.
- Account-holders can however partially withdraw funds from their PPF accounts up to 50% of the total amount deposited at the end of the 4th year or the amount deposited at the end of the previous year, whichever is lower. They can make a partial withdrawal from their accounts by submitting Form C once in a year.
Rules for closing the PPF account: You can also close your PPF account prematurely at the end of 5th financial year or after the maturity period.
- If account holders wish to close account prematurely they can do so only in two circumstances:
- If the account holder needs funds for the treatment of himself or spouse or children, he can close his account. He can withdraw the entire corpus of the amount deposited at the end of 4th financial year. However, to do so, he needs to submit the documents for the treatment from a professional medical authority.
- In case the account holder wants to close his account for expenses of his education or the education of his child, he can do so by submitting documents for illness from a reputed medical authority. He needs to provide the fee bill or admission confirmation from the reputed educational university.
Closing account after the maturity period: The tenure of PPF account is 15 years, and you can withdraw the entire amount and can close your PPF account after the end of the maturity period. However, if the account holders want to withdraw funds after the maturity period, he can do so by keeping the account open as well. He can withdraw up to the total amount deposited at the end of the maturity period. In case he does not close the account, the account will automatically continue, and he will continue receiving the interest payments.
