New PPF Rules: How Long Should I Pay and When Can I Withdraw?

Ans: You can now withdraw your entire PPF account balance and close it without needing to contribute again in April 2024. Your PPF account will be maturing on April 9, 2024, after completing 15 years from the opening date (April 9, 2009).

Just remember to visit your bank or post office with your passbook and withdrawal form to initiate the process.

Ans: You should keep the older account, which has been accumulating interest for a longer period of time. The reason is that once the 15-year lock-in is over, then such old PPF accounts create lot of liquidity. Hence, always choose and retain the one which you opened first.

Your 2020 PPF will not get any Interest; thus, consider closing it. As per the latest communication by the Ministry of Communications Department of Posts, accounts opened on or after 12/12/2019 are not eligible for such merger or amalgamation. You will get the invested amount without any interest.

To close your PPF account, you will need to submit a Form 10C to your bank or post office. You will also need to pay a penalty of Rs. 50.

Transfer the balance from the closed account to the active account. You can do this by submitting a Form 10D to your bank or post office. There is no penalty for transferring the balance between PPF accounts.

Ans: Understanding PPF Withdrawal Rules
You have made wise decisions by investing in PPF accounts for yourself and your son. Let's explore the rules regarding complete and partial withdrawals from these accounts.

Complete Withdrawal upon Maturity
Your PPF Account

Your PPF account, started in 2000, will mature after 15 years, and you can extend it in blocks of 5 years.

Maturity Withdrawal Process

Timing: Upon maturity, you can withdraw the entire amount.

Check Issuance: The maturity proceeds will be given in your name.

Extension Option

Without Withdrawal: If you extend without withdrawal, the balance continues to earn interest.

With Withdrawal: You can withdraw once a year without closing the account.

Your Son’s PPF Account
Your son’s PPF account, started in 2010, follows similar rules. When it matures, the proceeds can be withdrawn fully.

Complete Withdrawal for Minor's Account

Timing: The account matures after 15 years from the start date, so in 2025.

Check Issuance: The maturity amount is payable to your son. If he is a minor, the cheque will be issued in the guardian’s name.

Partial Withdrawal Rules
Your PPF Account

Partial withdrawals are allowed from your PPF account after completing 5 financial years.

Rules for Partial Withdrawal

Timing: Allowed from the 7th year onward.

Amount: Up to 50% of the balance at the end of the 4th year or the immediate preceding year, whichever is lower.

Check Issuance: The cheque will be in your name.

Your Son’s PPF Account
Partial withdrawals from your son’s PPF account follow the same rules, but there are additional conditions for minors.

Partial Withdrawal for Minor’s Account

Timing: Allowed from the 7th year onward.

Amount: Up to 50% of the balance at the end of the 4th year or the immediate preceding year, whichever is lower.

Check Issuance: The cheque will be issued in the guardian’s name, operated by your wife.

Ensuring Smooth Withdrawals
Documentation

Ensure proper documentation for withdrawals. For your son’s account, you need proof of your wife being the guardian.

Planning

Plan withdrawals considering the tax implications and future needs. PPF interest is tax-free, making it beneficial for long-term savings.

Strategic Considerations
Maximizing Benefits

Continue maximizing investments in PPF for its tax-free interest and Section 80C benefits.

Monitoring Accounts

Regularly monitor both accounts to ensure they align with your financial goals. Utilize partial withdrawals wisely to avoid unnecessary tax burdens.

Managing Financial Goals
Long-Term Goals

Your PPF accounts are excellent for long-term goals, like your retirement and your son’s education or marriage.

Diversification

While PPF is safe and tax-efficient, consider diversifying with other investments to balance growth and risk.

Seeking Professional Guidance
Certified Financial Planner

Consult a Certified Financial Planner to tailor your investment strategy. Professional guidance ensures your financial plans are robust and aligned with your goals.

Regular Reviews

Regularly review your financial plan and adjust it as needed. Life changes and market conditions may require updates to your strategy.

Your commitment to securing your financial future and that of your son is commendable. PPF is a reliable and tax-efficient tool for this purpose.

Conclusion
In conclusion, understanding the withdrawal rules for your PPF accounts helps you make informed decisions. Proper planning and regular reviews ensure you maximize benefits from these investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: 01. Yes. You may withdraw the amount from PPF Account in April,2025.
02. It is advisable to withdraw the amount from your daughter's account after 04.04.2025 (the date when she gets maturity). In this case amount will straight go to her account.
03. If however, you want to withdraw the amount after maturity of PPF Account, BUT before she attains majority, then the amount shall go to a saving account in her name, with your guardianship.
Most welcome for any further clarification. Thanks.

Ans: Hello;

You may hold the first account as your primary ppf account and close the second account as per bank/ post office procedure.

Best wishes;