Did You Know These Lesser Known Rules of PPF? – MoneyMindz

By | 04/09/2018

India’s First Free Online/On-call Financial Advisory Portal – MoneyMindz

    The Public Provident Fund was introduced in 1968. It has been a favourite investment option for Indians since then due to its guaranteed returns and safe investment avenues. Those who want to settle with moderate but assured returns are happy to opt for PPF. Other investment options like Mutual; Funds are available, but PPF continues to be popular to this day. How well do you know about PPF? Moneymindz, India’s First Free Online Financial Advisory

1. Extension of account upon PPF’s maturity

PPF tenure is 15 years. At the end of the tenure, it matures. At the time of its maturity, you can either close it and withdraw the entire amount or extend the account with or without fresh deposits. The PPF account can be extended in blocks of 5 years without any limit on the number of times extension is done. So if you want to extend without fresh deposits, no need to inform the branch. Free Online Financial Advisory, MoneyMindz. This is because no intimation within one year of maturity is taken as an extension without contribution upon maturity. But after that, you won’t be able to make fresh deposits and the PPFs account balance would be earning the applicable interest rates. So if you want to make fresh deposits, bring that to the notice of the bank or post office within one year from maturity date.

2. Partial withdrawal facility

Partial withdrawals are allowed so as to provide some liquidity for cases like an emergency or financial crisis.  Withdrawal is permitted from the 7th year onwards and you can withdraw only once in a year. PPF comes under the EEE (exempt, exempt, exempt) category for taxation. Moneymindz, India’s First Free On call Financial Advisory


3. Premature closure

PPF accounts have a lock-in period of 15 years. Premature withdrawal is permitted subject to certain rules and regulation. PPF account has to complete 5 financial years if the premature withdrawal has to be allowed. The reason for such withdrawal has to be something like the treatment of life-threatening disease, serious ailments of self, spouse, parents or dependent children or for funding of the account holders higher education. But the penalty is inevitable. The account holder gets 1% less interest rate than the applicable rate time to time from the date of opening to the date of premature closure.

4. Loan against PPF

An account holder can take a loan against PPF account from the 3rd Financial Year onwards. The loan amount is capped at a maximum of 25% of the balance amount at the end of the second year immediately preceding the year in which loan is applied. But since you can make partial withdrawals from the 7th year, You can’t take a loan on PPF from then on. Smart Financial Advisor, Kuber Mindz

5. Account transfer of PPF

PPF account can be opened in any bank or post office. But you can transfer PPF account for reasons like relocating to another location or to avail better service facilities. For that, you have to submit a PPF transfer request at your bank or post office.

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