PPF Withdrawal: Calculate your penalty before premature closure of Public Provident Fund account

PPF Withdrawal: Investment in Public Provident Fund (PPF) account is one of the most attractive investments for an earning individual. It is a risk-free investment and most importantly the Government of India stands as a guarantor to an investor's hard-earned money. So, at a time when PMC Bank scams, DHFL and Yes Bank crisis has been hitting the headlines, people may turn towards PPF account instead of bank deposit, bank FD, etc. According to the tax and investment experts, investment in PPF account allows an investor to claim Income Tax exemption benefit under Section 80C for an investment up to Rs 1.5 lakh. However, if you go for the PPF withdrawal prematurely, there is a penalty involved and one can do the PPF withdrawal prematurely under certain circumstances.

Speaking on the PPF withdrawal rules Kartik Jhaveri, Manager — Wealth Management at Transcend Consultants said, "A PPF account has a maturity period of 15 years but the account holder can renew it post-maturity in 5-year blocks without investing further in his or her PPF account. However, it doesn't mean one can't withdraw money from the PPF in case of a financial emergency. The PPF withdrawal is possible and the PPF account holder can close it prematurely if the account has completed 5 years tenure. But, the PPF account can be closed under special circumstances like financial emergency required by life-threatening disease to the account holder, spouse, dependent children of parents on producing the related documents. In the case of premature PPF withdrawal and closure, there will be 1 per cent interest penalty on the PPF withdrawal means 1 per cent of the interest return will be deducted as penalty for premature PPF account closure."

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Elaborating further on the PPF withdrawal Manikaran Singh, a SEBI registered tax and investment expert said, "A PPF subscriber is allowed partial PPF withdrawal from the 7th financial year and the amount of PPF withdrawal is also tax-free. However, the PPF withdrawal amount can't be above 50 per cent of the balance. Partial withdrawal in the PPF account is allowed to those also who have extended their PPF account beyond 15 years' tenure."