Public Provident Fund, popularly known as PPF, is one of the best choice for investing in middle class section of Indian society. Although bank FD also provides almost same interest on maturity, the profit from former is taxable; while PPF interest is 100% tax-free. Moreover, one gets tax benefit under Sec-80C also. That means you can invest upto Rs.1,00,000/- p.a. in your PPF account to save tax and enjoy tax-free maturity amount.
The tenure of a PPF account is 15 years. But it can be extended for further 5 years after its completion and it goes on.
Now, let us discuss what if one wants to withdraw money from PPF account.
First check your eligibility
A subscriber can apply for withdrawal from PPF only on completion of six years from the end of the year in which the initial subscription was made. Financial years are considered for calculating the number of years. E.g., 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.
The amount that can be withdrawn is 50% of the balance at the end of the fourth year preceding withdrawal or the year immediately preceding it, whichever is lower, less the amount of loan if any.
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.
One has to fill-up Form-C and submit it with pass-book in your bank or post office. The form can be downloaded from here.