The Public Provident Fund (PPF) Scheme has very strict and specific rules set down in relation to when an amount can be withdrawn from the account.
The PPF account can only be fully withdrawn from on maturity (15 years) from the date of creation. In cases of financial emergency, the subscriber can opt for partial withdrawals in order to meet emergency expenses. These withdrawals are subject to certain rules.
- Only one PPF account can be maintained by an individual, except an account that is opened on behalf of a minor. Joint accounts cannot be opened.
- A subscriber can open an account on behalf of a minor but subject to the maximum yearly contribution limit of Rs. 1.5 lakh in all the accounts.
- 100 is the minimum amount needed to open a PPF account, according to India Post’s website.
- The minimum deposit in a PPF account in a financial year is Rs. 500 and maximum are Rs. 1.5 lakh. A penalty of Rs. 50 is levied per year for default if the customer does not deposit the minimum amount of Rs. 500 in a financial year. PPF deposits can be done the maximum in 12 transactions in a financial year.
- The maturity period of PPF account is 15 years but can be extended within one year of maturity for further 5 years and so on. An account can be transferred from one authorized bank or post office to another. In such case, the PPF account will be considered as a continuing account.
- If PPF subscribers fail to subscribe the minimum amount Rs. 500 in a financial year, the account will be treated as discontinued. The subscriber in such cases will not be entitled to obtain a loan or make a partial withdrawal unless the account is revived. The subscriber cannot open another PPF account in addition to the discontinued one.
- A PPF subscriber can revive the discontinued account by payment of Rs. 50/- as the penalty for each year of default along with arrear subscription of Rs. 500 for each year.
- The PPF depositor is eligible for a loan in the third financial year of account opening. Loan up to 25 percent of the balance amount at the end of the first financial year can be availed. The rate of interest on the loan shall be at 2 percent per annum above the PPF interest rate. The loan is repayable in 36 months.
- Partial withdrawal is permissible every year from the 7th financial year from the year of opening account, according to India Post’s website. The maximum amount is limited to 50 percent of the balance at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.
- Premature closure is allowed only after the account has completed five financial years and under specific conditions like expenditure towards medical treatment, according to an amendment in 2016. “A subscriber shall be allowed premature closure of his account or account of a minor of whom he is the guardian on ground that amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children on production of supporting documents from competent medical authority,” the Finance Ministry said in a notification.
Key Points to Know about PPF Accounts
- PPF account allows one to make complete withdrawals only after the policy attains maturity i.e., at the end of the 15th year.
- The interest rates on PPF accounts are notified by the government from time to time and for the fiscal year 2016, it is 8.7% per annum.
- Partial withdrawals are allowed only after completion of five years from the date of initial subscription.
- The maximum amount that one can deposit in a PPF account is Rs.1.5 lakhs.