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PPF Account: Here Are 10 Benefits You May Not Be Aware Of

PPF Account: Partial withdrawal, loan, account extension, income tax benefits and other details here.

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PPF Account: Here Are 10 Benefits You May Not Be Aware Of

Partial withdrawals are allowed from PPF accounts even during the extended period.

PPF or public provident fund account is one of the most popular small savings scheme. PPF account holders can invest up to Rs 1.5 lakh in a financial year while the minimum deposit required is Rs 500. Deposits can be made in lump-sum or in 12 instalments. PPF deposits qualify for deduction from income under Section 80C of the Income Tax Act. In terms of income tax implications, PPF accounts also qualify for EEE (exempt, exempt, exempt) tax category, which means an investor is not liable to pay tax at all three levels - investment, earning and withdrawal.

Other Benefits Of PPF Account

1) Partial withdrawal from PPF account is allowed every year from 7th financial year from the year of opening account, India Post. The maximum amount allowed is limited to 50 per cent of the balance at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.

2) A PPF (public provident fund) account can be continued after maturity, with or without making further contributions.

3) The original maturity period of a PPF account is 15 years and it can be extended in blocks of five years.

4) Partial withdrawals are allowed from PPF accounts even during the extended period.

5) In case PPF account holders chose the with-contribution mode during the extended period, he or she can withdraw up to 60 per cent of the amount held in the account at the beginning of the extended period.

(Read: Why You Must Deposit Money In PPF Accounts Before Or On 5th Of Every Month)

6) But only one withdrawal is permitted per year. The balance continues to earn interest.

7) If the PPF account holder chooses the without-contribution mode during the extended period, any amount can withdrawn. But in this case also one withdrawal from PPF is allowed per year.

(Read: PPF Account Extension: Can You Continue PPF Account Without Further Deposits?)

8) The interest for the month on PPF account is calculated on the minimum balance available in the account from 5th of a month to the last date of the month. So if you deposit your money after the fifth day of the month, you stand to lose out on substantial interest income for that particular month.

9) Partial withdrawals from PPF account are also tax-free. "All payments from PPF are exempt from tax under Section 10 (11) and partial withdrawals or premature closure are not exceptions," says Naveen Wadhwa, DGM at Taxmann.com.

10) Loan facility available from 3rd financial year of the opening of the PPF account.

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