We all are aware that PPF(Public Provident Fund)is a long-term savings tool. It is a government backed social security scheme so there is no risk associated with the capital and the interest accrued!
As we all know that PPF is locked for 15 full financial years. But we can withdraw/ take loan from the existing corpus subject to some terms and conditions! To know them, read the full story!
Terms and Conditions to prematurely encash the corpus–
- Can close PPF a/c permanently only in emergencies like hospitalisation and educational needs. The primary a/c holder should furnish necessary proof claiming the reason to withdraw the corpus. Only if it is fulfilled, then only he can prematurely close PPF a/c permanently.
- 1% Discounted rate on the existing interest rate would be applicable at the time of closing PPF a/c permanently and paid accordingly.
- Partially withdrawn Clause– Can withdrawn partially from the end of 7th financial year upto-
- Can withdraw upto 50% of the corpus before 1 year of withdrawing or 50% of the corpus at the end of four financial years “Whichever is Lower”
- Loan Clause–
- The investor(PPF a/c holder)is entitled to take loan from the 3rd financial year.
- Only once loan can be taken and another loan would not be sanctioned until the loan is repaid fully
- Loan upto 25% of corpus prevailing at the end of 2nd financial year can be taken.
As-of-now PPF comes under EEE category(Exemption on- principle, interest and maturity corpus)and it can’t be attached to court decree in case of legal issues.
So PPF is said to be a wealth creator for risk-averse investors besides availing tax exemption up to 1.5 lakh under section 80(c)