Tracking the Dates of Your PPF Account

Public Provident Fund is one of the safest savings schemes in India. Many people prefer PPF over other savings schemes as the interest rate is high and your money is safe. PPF serves as a retirement fund. It also provides any investor with peace of mind knowing that there is a sufficient amount saved up to take them through retirement.

Investment Details

●       An investor can make a contribution of as low as Rs.500 to Rs.1.5 lakhs per year.

●       The investment has a long tenure of 15 years.

●       In a year, you can make 12 deposits to the PPF account.

●       Loan facility is available between the 3rd and 6th financial year.

●       Investors can make partial withdrawals after 5 financial years.

●       The full contribution falls under Section 80c and is exempted from Income Tax.

●       Investors can extend the maturity date by 5 years upon maturity.

Calculating the Maturity Date

The term mentioned in the features of the PPF is 15 years, but it’s actually the 16th year in which the deposit matures. This means if you open a deposit in 2016, the maturity should be 2016 + 15 = 2031. The last contribution towards your deposit can be made in the financial year 2030-31. The maturity date will be April 1st, 2031. Your last contribution can even fall on 31st March 2031.

Calculating the Withdrawal Date

Investors can make withdrawals from the 5th year onwards. The first withdrawal date will fall on 2016+5 = 2021. You can’t make a withdrawal before 31st March, 2021. If you do not make the withdrawal, you forfeit the right for that year. It is important to note that the amount you can withdraw is 50% of the amount that you have accumulated at the end of four years. You can then make withdrawals in the next years. The amount you can withdraw in the 6th year onwards is calculated as 50% of the amount you accumulated in the first 4 years, or the amount that is in your account in the preceding year, whichever is lesser.

Let’s take an example to understand it better. To keep things simple, we will not be taking interest into consideration but only the principal investment amount. You contribute Rs.10,000 every year from the financial year 2015-16. At the end of the fourth year, 2018-19, you would’ve accumulates Rs.40,000. You complete the fifth year in 2019-2020 with a total of Rs.50,000. In the year 2020-21, after you have finished 5 years, you can withdraw Rs.20,000, which is 50% of what you accumulated by the end of four years.

If you make the withdrawal, then in the 6th year, after your Rs.10,000 contribution, you will have Rs.30,000 left in the account. This means the amount in your account in the year preceding the withdrawal is lesser than what you accumulated in the fourth year. So you can withdraw Rs.15,000 in the 7th year.

If you do not make the withdrawal at all till the 7th financial year, then you’ve accumulated Rs.40,000 by the fourth year and Rs.60,000 by the 6th year. You will be allowed to withdraw Rs.20,000, which is 50% of the amount accumulated in the fourth year, as that is the lesser amount.

Calculating the loan date

Loans can be availed of from the 3rd financial year up to the 6th financial year. This means you can avail of a loan in 2017-18. The loan amount sanctioned will be up to 25% of the amount you invested in the first financial year. The interest charged is 1% over the interest paid on the PPF. Once the loan is fully repaid, investors are entitled to take another loan. If you choose to take a loan in the 4th year, the amount of loan that can be granted will be 25% of the balance at the end of the 2nd year.

Illustration of important dates of a PPF account

Opening of the account	2015-16
Maturity Date	1st April, 2031
Last date for any contributions	31st March, 2031
First withdrawal	1st April, 2020
First loan	1st April, 2017

It’s important to keep track of your own PPF account and ensure you make the minimum contribution every year. You can also make the most of the account when you are aware of your loan date, withdrawal dates and so on. A PPF account has a number of advantages besides serving as a savings and retirement plan.