Wednesday, 2 May 2018

Information on Public Provident Fund (PPF) from official Govt. of India websites; Details about Withdrawal from PPF

I recently needed to refer to official sources for Public Provident Fund (PPF) account as the officer at the bank where I have my PPF account did not have a clear answer to a particular question of mine.

Browsing the net led me to many sites having info. on PPF but what I need is Govt. of India websites as that information would be authoritative and, if required, I would be able to point the bank officer to the Govt. of India websites.

I found two Govt. of India websites having info. on PPF which together seems to provide the key rules associated with the PPF account. I thought this info would be useful to some others too and so decided to put up this post.

Authoritative Website 1 : Income Tax Department, Government of India

Income Tax Department -> All Rules -> Public Provident Fund Scheme, 1968,    https://www.incometaxindia.gov.in/pages/rules/public-provident-fund-scheme.aspx

Ravi: Has 14 rules (Rule 1 to Rule 13 with Rule 4 having a variation of Rule 4A) each of which can be viewed by clicking on the associated link. I could understand the description without too much difficulty though I can imagine it will be a little challenging for anybody who is viewing such rules for the first time.

A key rule about PPF is the Withdrawal rule as it is a controlled withdrawals scheme of the Indian govt. with tax benefits offered to the (Indian) subscriber. I have given below some extracts from Rule 9 - "Withdrawal from the Fund." [extracts copy-pasted on 2nd May 2018].

9. (1) Any time after the expiry of five years from the end of the year in which the initial subscription was made, a subscriber may, if he so desires, apply in Form C, or as near thereto as possible, together with his pass book to the accounts office, for withdrawing from the balance to his credit and amount not exceeding fifty per cent of the amount that stood to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower, less the amount of loan, if any, drawn by him under paragraph 10 and which remains to be repaid:
Provided that not more than one withdrawal shall be permissible during any one year.
...
(3) Notwithstanding the provisions of sub-paragraph (1) any time after the expiry of 15 years from the end of the year in which the initial subscription was made by him, a subscriber may, if he so desires, apply in Form C or as near thereto as possible together with his pass book to the accounts office for the withdrawal of the entire balance standing to his credit [... Ravi: sentence continues into some intricate details which I felt can be omitted in this post].
...
(3A) Subject to the provisions of sub-paragraph (3), a subscriber may, on the expiry of 15 years from the end of the year in which the initial subscription was made but before the expiry of one year thereafter, exercise an option with the accounts office in Form H, or as near thereto as possible, that he would continue to subscribe for a further block period of 5 years according to the limits of subscription specified in paragraph 3.
(3B) In the event of a subscriber opting to subscribe for the aforesaid block period, he shall be eligible to make partial withdrawals not exceeding one every year by applying to the accounts office in Form C, or as near thereto as possible, subject to the condition that the total of the withdrawals, during the 5 years block period, shall not exceed 60 per cent of the balance at his credit at the commencement of the said period.
...
(3C) A subscriber shall be allowed premature closure of his account or the account of a minor of whom he is the guardian, on a written application to the Accounts Office, on any of the following grounds namely:—
  (i) that the amount is required for the treatment of serious ailments or life threatening diseases of the account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority;
  (ii) that the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad:
Provided that such premature closure shall be allowed only after the account has completed five financial years:
Provided further that premature closure under this sub-paragraph shall be subject to deduction of such amount which shall be equivalent to one per cent less interest on the interest rates as applicable from time to time in the table payable on the deposits held in the account from the date of opening of the account till the date of such premature closure, calculated in accordance with the sample calculation as shown in the table : [Ravi: omitted the Table]
...
Note : A subscriber may at his option (to be exercised before the expiry of the first year of every extended block period) avail of this facility for a further block of 5 years on expiry of 20 years or on expiry of 25 years and so on, from the end of the year in which the initial subscription was made.
--- end Rule 9 extracts from Income Tax Dept. Govt of India website ---

Authoritative Website 2 : Ministry of Finance, Dept. of Economic Affairs (Govt. of India)

PPF: https://dea.gov.in/budgetdivision/ppf

[Ravi: I have given below some important document download links related to PPF as on 2nd May 2018 from the above webpage]

* Premature Closure of PPF Account, 18th June 2016,  https://dea.gov.in/sites/default/files/Premature_ppf18162016_0.pdf (2 pages)
[Ravi: The above document deals with premature closure possibility in case of serious illness and higher education expenses (on production of appropriate supporting documents) with a penalty of 1% lesser interest.]

[Ravi: There seems to be a repeat entry of this 18th June 2016 document with same description "Premature Closure of PPF Account", with the document link being https://dea.gov.in/sites/default/files/Premature_ppf18162016%20%281%29.pdf (2 pages).]

* Corrigendum, 18th June 2016, https://dea.gov.in/sites/default/files/Premature_ppf_coorigendum18162016_0.pdf (1 page)
[Ravi: Corrects a table in above document(s)]

* Public Provident Fund Amendment Scheme, 2014, 13th August 2014, https://dea.gov.in/sites/default/files/PPF_amendment_scheme2014_0.pdf (1 page)
[Ravi: Seems to deal with increase in per year max. contribution to 1,50,000 from 1,00,000.]

[Ravi: Unfortunately this website does not provide the 1968 PPF Scheme gazette notification document which I guess would be the authoritative starting point. To that starting point, the amendments over time need to be added/factored in to understand what the PPF scheme is now.]
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[I thank www.incometaxindia.gov.in and have presumed that they will not have any objections to me sharing the above extracts from their website on this post which is freely viewable by all, and does not have any financial profit motive whatsoever. Note that this post only shares information about an Indian govt. tax saving scheme - PPF - and so is intended to help Indian readers.]

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