Need Emergency Cash During COVID? Know How to Withdraw From PPF, Bank FDs, PF, NPS
Severe second wave of
Covid-19 has hugely impacted the lives of people from all spheres. It has not
only dented the health infrastructure but made it difficult for ordinary masses
to meet their ends owing to the financial crunch. Several are considering premature
withdrawals from their investment schemes such as Provident Fund (PPF),
National Pension System (NPS) or fixed deposits (FD) in case of emergency cash
requirements. As drawing money entails a detailed list of dos and don’ts, here
are rules or policies related to permitted withdrawals, penal charges and
taxation.
Public
Provident Fund (PPF)
As per PPF guidelines,
funds can be withdrawn from the PPF account only after the period of five years starting from the year
it has been opened. But a maximum of 50% of the total sum can be taken out
prematurely. However, the withdrawals can only be made once in a financial
year.
Moreover,
partial/premature withdrawals from the PPF account are exempted from tax. To
withdraw the fund, one needs to fill and submit Form C in the concerned branch
of the bank where the PPF account lies.
Employees’
provident Fund (EPF)
Partial withdrawal of
fund from EPF account is taxable with few exceptions such as employment termination
and medical emergencies. However, the withdrawal becomes tax-free after the
completion of the five-year tenure.
Fixed
Deposits (FDs)
In case of Fixed
Deposits (FD), the depositor cannot avail the facility of premature withdrawal.
He can only withdraw before time, if he closes his FD account before the date
of maturity. Moreover, one has to bear penalty charges ranging from 0.5 percent
to 1 percent for liquidating a fixed deposit before its stipulated time period.
National
Pension System (NPS)
Under NPS, a government sponsored pension scheme, one
can only withdraw the sum after the completion of three years. After three
years, investors can take out only 25 percent of the total invested sum.
Withdrawals under this scheme are exempted from tax.
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