Public Provident Fund (PPF) is a good possibility for long run funding, which presents good returns and tax exemption together with monetary safety. Nonetheless, typically the requirement of cash is sudden, and also you search for the choices to achieve liquidity. On this state of affairs, PPF offers you with few choices, together with to take a mortgage on PPF or withdraw some cash from it (Partial Withdrawal).
Nonetheless, with the choices, comes the confusion of selecting higher. It this text, we are going to examine which possibility is healthier: to take a mortgage or withdraw the cash? With each the choice, one must comply with sure guidelines, and each the choices have their benefits and drawbacks.
Loan From PPF
People can take a mortgage solely from the third monetary 12 months of opening a PPF account until the top of the sixth monetary 12 months. Which means when you’ve got opened the account in FY 2021-22, then you may apply for a mortgage from FY 2023-24 to FY 2026-27.
The most mortgage quantity you will get is 25% of your account steadiness as of the top of the second monetary 12 months earlier than the 12 months you’re making use of for the mortgage. The rate of interest on PPF mortgage is just one% greater than the present rate of interest on PPF. If 7.1% curiosity is being given on PPF, then 8.1% would be the curiosity charged on the mortgage.
People ought to ensure that they repay the mortgage principal inside 36 months. Furthermore, they will repay the curiosity in two month-to-month instalments after repaying the principal. Failing to repay the principal in 36 months will appeal to the upper rate of interest.
Partial Withdrawal
People can begin withdrawing cash from the seventh monetary 12 months of opening a PPF account. Which means if the account is opened in FY 2018-19, then they will withdraw cash from FY 2025-26. Nonetheless, the cash may be withdrawn solely yearly.
You may withdraw as much as 50% of the steadiness from both the earlier monetary 12 months or 4 years in the past, whichever quantity is decrease. The main benefit of selecting the partial withdrawal possibility is that you needn’t repay the quantity and subsequently, no curiosity is levied on that.
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Written By
Akshat Mittal
Might 02, 2025 11:31
