Public Provident Fund (PPF) is one of the most favoured retirement savings schemes and is used the most by people.
Anyone can invest in this government-backed savings-cum-tax saving scheme that enables one to invest in it with an annual contribution of a minimum of Rs 500 and a maximum of Rs 1,50,000. Introduced in 1968, PPF presently has an interest rate of 7.1 per cent.
The scheme is a 100 per cent risk-free investment as it is backed by the central government and doesn't change in line with stock exchange rates that tend to alter from day to day.
The maturity time of PPF is 15 years, but an account holder can shut his or her account before the maturity period.
As per the PPF withdrawal rules, any person who holds an account in the scheme can close his/her account given that certain terms and conditions have been fulfilled. This only applies when the particular PPF account has completed five years.
Here are the five rules to know regarding PPF withdrawal:-
1. A PPF account holder can fully withdraw the account balance only upon the scheme's maturity i.e., post the completion of 15 years.
2. In case of financial emergency, partial PPF withdrawal is allowed from seventh year of account opening.
3. An account holder can also make premature withdrawal but is only eligible to do so after completion of four years of PPF account opening.
4. If one doesn't want to close his/her account, he or she can keep the PPF scheme active without contributing anything to it. In such a case, the interest rate will keep adding to the balance amount till it is closed. The account holder can choose to withdraw any amount of money once per financial year.
5. If the PPF account holder wants to keep his/her account active with contributions, he or she can apply for an extension on a five-yearly basis.
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