INSUBCONTINENT EXCLUSIVE:
A PPF account holder can make partial withdrawals even during the extended period.Public provident fund account, or PPF, which has a
maturity period of 15 years, is one of the most popular savings scheme in India
PPF enjoys the benefit of EEE (exempt-exempt-exempt) status in terms of tax implication
Contribution up to Rs 1.5 lakh in a financial year (under Section 80C), interest earned and maturity proceeds are tax free
After maturity period of 15 years, a PPF account can be extended in blocks of five years, with or without making further
contributions.Financial planners say that if there is no immediate fund requirement, one should extend the PPF account beyond 15 years
"After the 15 years initial block, it is better to extend the PPF account," says Ramalingam K, director and chief financial planner at
Chennai-based Holistic Investment Planners (www.holisticinvestment.in)
"There is no need to contribute and also he/she can withdraw once in a year."A PPF account holder can make partial withdrawals even during
Withdrawals from PPF account are not taxable
In case the PPF account holder has opted for the without-contribution mode for the extended period, any amount can be withdrawn
But only one withdrawal from PPF is allowed per year.PPF accounts currently fetch an interest rate of 7.6 per cent
"It (PPF) is yielding 7.6 per cent tax-free - which is better than bank fixed deposit or FD rates
Even senior citizen FD rates are lesser than this
So instead of closing it, you can extend it," adds Mr Ramalingam.Even if a PPF investor needs money, Mr Ramalingam suggests, it is better to
withdraw from your bank fixed deposits which are yielding less than PPF."Extension of PPF account is attractive - considering its slightly
higher rate of return - regardless of your tax bracket
Even if you come under zero tax bracket, PPF extension is attractive," he adds.The interest income from bank fixed deposit or bank recurring
