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PPF Extension: What are Yearly Withdrawal Rules?

Milind

Milind Vadjikar  | Answer  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 10, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Jun 16, 2024Hindi
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I am having PPF which is getting maturity in Apr 2025. What are yearly withdraw rules if I extend for another 5 years with minimum investment?

Ans: If you opt to extend your PPF account for another 5 year term after end of first 15-year term, you can only withdraw 60% of the balance accumulated at the time of extension over the new 5 year period.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |9790 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 27, 2024

Money
I've started a PPF account and it got matured in 2019 and extended it for 5 years. The maturity value would be around 10L by Mar 25. I want to invest the maturity amount for further 3 years for the purpose of my daughter's college admission (2028). Please suggest whether I can withdraw it and invest it elsewhere (your expert opinion here pls) or continue for further 5 years and withdraw partially - which one is best?
Ans: Evaluating Your PPF Investment Strategy
At this stage, you have a matured PPF account, extended for five years, maturing again in March 2025 with an estimated value of Rs. 10 lakhs. Your objective is to invest this amount for three years to fund your daughter's college admission in 2028. Let’s evaluate the best options for you.

Understanding PPF Extension Benefits
Safety and Returns:

PPF is a government-backed scheme offering tax-free returns. Extending PPF ensures continued safety and stable returns without market risks.

Flexibility:

After the extension, you can withdraw partially or the full amount as needed. This flexibility can be beneficial for short-term goals.

Interest Rate:

The current PPF interest rate is attractive compared to other fixed-income instruments. Extending the PPF can help accumulate additional interest without tax implications.

Alternatives to PPF Extension
While PPF is a safe and reliable option, other investments could offer higher returns for your three-year investment horizon. Let’s explore these options.

Short-Term Debt Mutual Funds
Advantages:

Higher Returns: Debt funds typically offer higher returns than fixed deposits and PPF for short-term investments.
Liquidity: Easy to redeem and usually no lock-in period.
Tax Efficiency: If held for more than three years, gains are taxed at a lower rate due to indexation benefits.
Considerations:

Market Risks: Though low, there are some market risks involved compared to PPF.
Tax on Gains: Short-term capital gains are taxed as per your income tax slab.
Fixed Maturity Plans (FMPs)
Advantages:

Predictable Returns: FMPs invest in fixed-income securities maturing at the same time as the plan.
Tax Efficiency: Held for over three years, they benefit from indexation, reducing tax liability on gains.
Considerations:

Lock-In Period: Limited liquidity due to fixed tenure.
Lower Returns: Slightly lower returns compared to other debt funds.
Recurring Deposits (RD) or Fixed Deposits (FD)
Advantages:

Safety: Guaranteed returns with minimal risk.
Fixed Returns: Interest rates are locked in, providing predictable income.
Considerations:

Tax on Interest: Interest earned is taxable as per your income tax slab.
Lower Returns: Typically offer lower returns compared to debt funds.
Making the Decision
Based on your need for the funds in 2028, here are some considerations to help you decide between continuing the PPF extension or withdrawing and reinvesting elsewhere.

Continue PPF Extension
Benefits:

Safety and Stability: Guaranteed returns with no market risk.
Tax-Free Interest: Continued tax-free interest accumulation.
Drawbacks:

Moderate Returns: Potentially lower returns compared to other investment options.
Withdraw PPF and Reinvest
Option 1: Short-Term Debt Mutual Funds

Higher Potential Returns: Offers better returns compared to PPF and fixed deposits.
Liquidity and Flexibility: Easier to withdraw funds when needed.
Option 2: Fixed Maturity Plans (FMPs)

Predictable Returns: Provides a clear understanding of expected returns.
Tax Efficiency: Beneficial tax treatment if held for more than three years.
Option 3: Fixed Deposits or Recurring Deposits

Safety and Security: Guaranteed returns with minimal risk.
Lower Potential Returns: Typically lower returns than debt mutual funds.
Recommended Strategy
Considering your goal of funding your daughter’s college education in 2028, a combination of safety and potential returns is crucial.

Suggested Approach:

Partial PPF Withdrawal: If liquidity is needed before 2028, consider withdrawing a portion of your PPF and reinvesting in short-term debt mutual funds or FMPs for higher returns.
Continue PPF: For the remaining amount, continue with the PPF extension to benefit from guaranteed, tax-free returns.
Example Strategy Breakdown
Option 1: Partial Withdrawal and Reinvestment

Withdraw Rs. 5 lakhs from PPF: Invest this amount in a short-term debt mutual fund or an FMP.
Continue Rs. 5 lakhs in PPF: Benefit from stable, tax-free returns.
Option 2: Full PPF Continuation

Continue Rs. 10 lakhs in PPF: Ensure guaranteed, tax-free returns until 2028.
Plan for Partial Withdrawals: Utilize PPF’s partial withdrawal option if needed before 2028.
Conclusion
Balancing safety, liquidity, and returns is key to achieving your goal. By combining partial PPF continuation with strategic reinvestment in higher-yielding instruments, you can optimize your investment for your daughter’s college admission.

Key Points:

Evaluate Your Risk Tolerance: Ensure your investment choice aligns with your risk appetite.
Consider Tax Implications: Factor in the tax benefits and liabilities of each investment option.
Review Regularly: Monitor your investments periodically to ensure they are on track to meet your goals.
By carefully selecting your investment strategy, you can achieve the necessary funds for your daughter’s education while balancing risk and return.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Hi, my son has secured an admission in a 2+2 BITS CSE program 2025 at Hyderabad (first 2 years) and Iowa state univ (for next 2 years). Under DASA he can potentially get AI at NITK or ECE at NIT Trichy or CSE in NITW (his CRL rank is 25200). Can you please advise and provide recommendations on what we can choose and reasons? We know 2+2 ISU program is more expensive compared to NIT DASA fees but is it worth the money vis-a-vis doing a B.Tech at NIT and doing a masters in US later? For this rank, what can he get at the said NITs under DASA?
Ans: The BITS Pilani–Iowa State University 2+2 CSE offers two years at BITS Hyderabad (ACM-aligned curriculum, NAAC A++ accreditation, state-of-the-art AI, data-science and cloud labs) followed by two years at Iowa State University (top-50 US engineering program, immersive B.S. in Computer Engineering, ISU merit scholarships up to US $4,500/year). Total direct tuition and campus fees for BITS Hyderabad amount to approximately ?10.5 L per year, while Iowa State tuition exceeds US $33,000 annually, plus living expenses. Graduates earn dual degrees with global brand recognition and typically secure near-100% placement through BITS’s 200+ recruiter network and ISU’s strong career services, commanding premium compensation packages in software, data science and R&D roles.

Under DASA with an All-India CRL of 25,200, he qualifies for: B.Tech AI at NIT Surathkal (AI cutoff: 26,688); B.Tech ECE at NIT Trichy (ECE cutoff: 66,706); and B.Tech CSE at NIT Warangal (CSE cutoff: 46,935). Each NIT features NBA accreditation, experienced PhD faculty, modern labs and strong industry MoUs. NITK AI and NITW CSE boast placement rates above 80% and growing AI/analytics recruitment pipelines, while NIT Trichy ECE records near-75% core-sector placements. Annual DASA fees at NITs range from US $15,000–18,000, significantly lower than BITS-ISU costs, with comparable scholarship opportunities limited.

Balancing long-term ROI, the BITS 2+2 path accelerates global exposure, dual-degree credentials and premium placements at higher upfront cost. A B.Tech at NIT followed by a US master’s entails lower initial investment, robust core engineering training and the flexibility to self-fund graduate studies through campus placements or scholarships.

Recommendation: Opt for BITS 2+2 CSE if you prioritise world-class international exposure, dual degrees and, top-tier placement networks despite higher fees. Choose a DASA seat at NIT (AI at NITK or CSE at NITW) for cost-effective core engineering training with solid placement and later pursue a US master’s via merit scholarships. All the BEST for a Prosperous Future!

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Best option in iiit hyderabad for better placement and early internship in btech and dual degree for course cse with speclization ai ml
Ans: Dipanshu, IIIT Hyderabad’s B.Tech in CSE offers an ACM-aligned curriculum covering algorithms, systems, AI/ML, data science and electives in computer vision and NLP, delivered through state-of-the-art AI, cloud-computing and robotics labs. A 12-credit Practice School internship begins in the fifth semester, supported by a proactive placement cell and corporate mentoring, yielding a 99% placement rate for BTech CSE with an average package of ?31.98 LPA over the past three years. Faculty include PhD-qualified researchers with strong industry collaborations, and accredited NAAC A++ status underpins academic quality. The five-year dual-degree integrates the BTech foundation with a research-oriented MS by Research, immersing students in advanced AI/ML theory, thesis work under DST/CSIR grants, and early research assistantships via centres like Kohli Center on Intelligent Systems. Dual-degree cohorts see 100% MS placement at an average of ?26.46 LPA, and graduates often secure RA internships and stipends of ?20,000–?50,000 monthly through lab-based projects. Both paths benefit from IIIT-H’s industry MoUs, interdisciplinary innovation hubs and global recruiter network, yet differ in academic depth, time-to-degree and placement profiles.

Recommendation: Opt for the BTech CSE for its higher average placement packages, structured Practice School internships from year three and broader recruiter diversity. Choose the dual degree if you seek early research immersion, advanced AI/ML specialization, funded thesis work and a stronger pathway into academia or R&D roles. All the BEST for a Prosperous Future!

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My son got admission in KCG college chennai with CSE. Now we got CSE in Amrita Chennai. My concern that Amrita chennai feeswise more than double comes to around 18 laks whereas KCG 8 laks overall Kindly suggest which one is good. Amrita is over burden for me. Still considering my son career I am ready to take loan or something to manage. Kindly suggest which one is goo
Ans: Raj Sir, KCG College of Technology, affiliated to Anna University and AICTE-approved, holds NAAC A+ and NBA accreditation for its CSE programme, a centrally located 50-acre campus with 140+ virtual and physical labs, including specialized AI, cloud and programming facilities. Its dedicated placement cell reported an 88%–94% placement rate over the past three years, with an average package of ?5 LPA and top recruiters such as Accenture, Cognizant, IBM and Amazon. Total tuition fees amount to approximately ?2 lakhs for the entire B.E. course.

Amrita School of Engineering Chennai, a constituent of Amrita Vishwa Vidyapeetham (NAAC A++), operates a 13.5-acre hill-campus with state-of-the-art AI, data-science, cybersecurity and cloud labs, and a strong industry-university research ecosystem. Its CSE graduates achieved a 90%+ placement consistency in 2024, with an average package of ?9.2 LPA and participation from 300+ recruiters including TCS, Wipro, Accenture and Amazon. Total tuition fees for B.Tech CSE are ?18 lakhs over four years.

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Recommendation: Opt for Amrita Chennai CSE if investment is feasible, to leverage its superior placement outcomes, advanced research infrastructure and extensive industry linkages. Choose KCG College CSE for an accredited curriculum with solid placement consistency at a significantly lower cost, preserving financial flexibility. MY SUGGESTION: Finalise KCG and advise your son to keep upgrading his skills during the next 4 years, build a strong & professional LinkedIn Profile, improve his soft skills etc., to be competitive among other students for campus placement. All the BEST for a Prosperous Future!

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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