The Public Provident Fund (PPF) is a 15-year deposit guaranteed by the government. Investors can open a PPF account with the SBI or its subsidiaries, any nationalised bank, head post offices or specified post offices. One can make subscriptions either as a lump sum or in instalments during the year. The minimum investment you need to make in a year is Rs 500, and the maximum limit is Rs 1,00,000. The interest is paid at rates fixed by the government from time to time (currently 8.6%), which is compounded annually. The investments are eligible for tax deduction under Section 80C. You can withdraw the maturity amount, which is non-taxable, after 15 years, or extend the account by five years. It provides partial withdrawal facility, which can be availed of only after the expiry of specified time periods.
Eligibility: A subscriber can apply for withdrawal from the fund only on completion of six years from the end of the year in which the initial subscription was made.
Amount: The amount that can be withdrawn is 50% of the balance at the end of the fourth year preceding withdrawal or the year immediately preceding it, whichever is lower.
Information: The depositor has to fill Form C for withdrawal. It can be downloaded from indiapost.gov.in/pdfForms/PPFWithdrawal.pdf.
Submission: The PPF account number and the amount to be withdrawn have to be filled in the form. It must be signed by the account holder. The form and pass book have to be submitted to the bank/post office.
Points to note
Calculation of completed years: Financial years are considered for calculating the number of years. If a PPF account is opened in April 2001, it will complete its first year in March 2002 and you can withdraw from it only from April 2007.
Withdrawal limit: A depositor can make only one withdrawal in a year. A declaration to this effect should be given in the Form C used for withdrawal.
Penalty for non-operation: An inactive account has to be revived by paying the penalty and subscription arrears before applying for withdrawal.
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February 6, 2012