PPF also known as public provident fund is a great investment tool because of the tax free returns it provide and also it is one of the safest instrument when it comes to investment. However there is one limitation of this investment that is lock – in period which is 15 years and therefore it does not provide liquidity when the investor wants it. There are certain important points relating to withdrawal of PPF money, let’s look at some of them –
- One can withdraw only partial amount, full withdrawal can be made only after completion of 15 years.
- Partial withdrawal of money can be done after completion of 5 year onwards since one started making contribution in the PPF account. For example if you started in the year 2004 than you can withdraw after completion of the year 2009 and not before that.
- The withdrawal limit should not exceed 50% of the balance at the end of the fourth year, or 50% of the balance at the end of the immediate preceding year, whichever is lower. For example if you want to withdraw in 2010 (for the PPF account which is started in the year 2000) than the amount which one can withdraw is 50 percent of balance at the end of the year 2004 or 2009 whichever is lower.
- One can withdraw only once in a year, multiple withdrawals in one year are not allowed.
- One does not have to pay tax if he or she withdraws from PPF before maturity.