Understanding Rules For PPF Withdrawals

by Viney Kumar Freelance Writer & blogger

Try to ask anyone about the safest option to invest in for saving taxes in India –approximately 99 out of 100 people will advise you to invest in PPF (Public Provident Fund). A PPF account in India is synonymous with tax-saving and is also the most popular tax-saving instrument.

Compared to other tax-saving tools in the market such as fixed deposit/recurring deposit accounts, etc. PPF has a much higher rate of interest to offer to the investors. You can choose to invest a sum of Rs 500 to Rs 1, 50,000 in the PPF, depending upon your saving budget.

Although, the PPF scheme gives an option of partial withdrawals to the investors; you can go for the complete withdrawal only after your PPF account has matured, i.e. after completing 15 years starting from the date it has been created.

Steps to check/view your PPF account balance:

In case you have opted for the net banking service, you can easily calculate your PPF balance in these easy steps:

1. Login to your bank website with your registered ‘Username’ and ‘Password’.

2. There, below the PPF segment, click on the ‘Balance Information’ option.

3. Following this, you will get complete details related to your PPF account such as deposits made by you, the interest accrued on your deposits and your current PPF balance.

In some banks, one also gets the option to link one’s account to another savings bank account.

However, usually, your savings and PPF accounts are managed by a single bank. Besides checking your PPF account balance, your net banking portal also gives you the option to transfer or deposit funds online.

In case, you are not good with remembering dates, you can register for a Standing Order (SO) service with your bank account and a certain amount of money will be directly deposited in your PPF account every month on the date chosen by you.

Hence, if you haven’t registered for netbanking yet, it’s time you should enroll in the service as it will save you from a lot of hassles. With net banking facility, you won’t have to visit your bank branch every time you want to check/view your PPF balance or other related details.

However, it’s important to know beforehand, that there isn’t any provision to check your PPF account balance online if you have a PPF account in a post office. In such scenarios, you will have to visit the branch of the particular post office along with your PPF account’s passbook and get the details checked. Once again, it’s important to know that every post office necessarily doesn’t have PPF account facility.

Important Facts About PPF Withdrawal:

• As already stated, the PPF scheme allows partial withdrawals after completing 6 financial years into the scheme or from starting of the 7th fiscal year. The timeframe for the financial year starts from 1st April of every year and ends on 31st March of the next year.

For instance, if Deepak has opened a PPF account in January 2012, he will be able to use the partial withdrawal facility only after 1st April’2017. Let’s illustrate it further.

As Deepak has opened his PPF account in January 2012, it means that his PPF account was created in the financial year 2011-2012. Therefore, the total number of financial years till April’2017 will be:

i. April 2011-March 2012 = 1st Financial year

ii. April 2012-March 2013 = 2nd Financial year

iii. April 2013-March 2014 = 3rd Financial year

iv. April 2014-March 2015 = 4th Financial year

v. April 2015-March 2016 = 5th Financial year

vi. April 2016-March 2017 = 6th Financial year

Finally, Deepak can start making partial withdrawals from his PPF account from 1st April’2017.

• Going forward, one should note beforehand that s/he is allowed to make only one partial withdrawal per financial year, starting from his 7th financial year into her/his PPF account.

• The maturity duration for a PPF account is 15 years, starting from the date it has been opened.

• A PPF account can’t be prematurely closed in any case, except for unfortunate demise of the account holder.

Conclusion:

All in all, creating a PPF account is undoubtedly one of the safest and the best options when it comes to savings on your money as well as your taxes. The option for early/partial withdrawal really comes handy in financial emergency situations such as paying for the higher education of your kids, medical treatments, etc.