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PF; Public Provident Fund (PPF) Withdrawal Rules; Key Things You Need To Know | If you need money, you are making a plan to withdraw money from PPF account, first learn the rules related to it here

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  • PF; Public Provident Fund (PPF) Withdrawal Rules; Key Things You Need To Know

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Many people are facing money related problems due to Corona Crisis. In such a situation, many people are planning to withdraw money from their Public Provident Fund (PPF) to meet their needs. But before doing this, you should know the rules for withdrawing money from PPF before maturity and the charges that can be levied on it. We are telling you about the pre-maturity withdrawal from PPF.

Can I withdraw money from PPF account before maturity?
Money cannot be withdrawn from this account for 5 years after the year of opening the PPF account. After completion of this period, money can be withdrawn by filling Form 2. However 1 year will be deducted from your fund if you withdraw money 15 years ago. That is, you can withdraw money after 5 years.

For which activities can I withdraw money?
After 5 years, you can withdraw money for the treatment of any serious illness of your spouse, dependent child or parents. Apart from this, if the account holder is a minor, he can also withdraw money for his higher education. For this, the account holder will have to provide the necessary documents.

Is there a facility to take a loan on a PPF account?
You can also take a loan against a deposit on a PPF account. You are entitled to take a loan from PPF in the financial year in which you have opened a PPF account, from one financial year after the end of that financial year to the end of the fifth financial year. If you have opened a PPF account in January 2017, then you can take a loan from 1 April 2018 to 31 March 2022. You can take a maximum loan of 25% on the deposit.

How much interest has to be paid?
On taking a loan on PPF, the principal of the loan is to be repaid first, followed by interest. The principal can be repaid in two or more installments or monthly installments. The principal amount of the loan has to be paid in 36 months from the month in which the loan is taken. The effective interest rate for a loan is only 1% higher than the interest on PPF. Interest can be repaid by two monthly installments or lump sum. If you have repaid the loan principal within the stipulated time but some part of the interest is left, then it is deducted from your PPF account.

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What will happen if I do not repay my loan on time?
If the loan has not been repaid in 36 months or is only partially paid, then the remaining loan amount will be charged at the rate of 6% per annum. This 6% interest rate will last from the first day of the month in which the loan is taken, till the last day of the month in which the last installment will be paid. That is, the interest rate which was earlier becoming 1%, if the loan is not repaid within 36 months, it will become 6% from the beginning of the loan.

If the account holder dies, his nominee or heir will pay his loan interest. Interest rates on PPF vary on a quarterly basis, but the loan rate will remain the same till the loan is repaid as decided at the time of taking the loan.

What if you are not able to invest continuously in PPF account?
You have to invest a minimum of 500 rupees every year in a PPF account. At the same time, maximum investment of Rs 1.5 lakh can be done in a financial year. If you miss a deposit of Rs 500 in a financial year, then your PPF account is deactivated (inactive). Once the PPF account becomes inactive, you cannot close it before 15 years.

There is no facility to take a loan on an account that has been activated. In such a situation, if you have missed contributing to the account in any year, then start it again after that it will become active again. PPF accounts closed before the date of maturity cannot be permanently closed.

How to resume PPF?
If your PPF account becomes inactive, then to get it started again, you will have to submit a written application to the bank or post office where it is open. After this, you have to give an application to the bank or post office to get your account started. For this, you will also have to pay a penalty of Rs 50 with a minimum annual contribution of Rs 500.

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