A PPF account can be opened at specified nationalized banks or post office. Contri-butions in the names of spouse and children qualify for the rebate, but the investment will be deemed as a gift. PPF is a 15-year scheme and can be extended by 5 years at a time. Any sum between Rs 100 and Rs 60,000 per annum can be contributed to the account in a lump sum or monthly installments. Under this scheme even premature withdrawals are non-taxable, since it is in the nature of capital receipt.
Individuals have the facility to withdraw their money from the seventh year of the scheme.
The withdrawal amount is limited to 50 per cent of the amount deposited in the preceding four years from the date of withdrawal, or immediately preceding year, whichever is lower. Let us understand this more clearly. Suppose you are depositing Rs 60,000 every year and you need to withdraw after the end of the seventh year. Contribution to PPF on the last day of the sixteenth year may not get any interest, but one can claim a tax-rebate on the investment amount. In case, one chooses to extend the account, one must submit Form H if he wants to claim Section 88 tax benefits on fresh contributions.