Closing and Reopening PPF Account

#1
My PPF account will become 15 years old this year. PPF has always been my favourite investment option (for tax saving & also otherwise). My original plan was to renew the account for another 5 years. But the far left taxation policies of this government have scared the hell out of me. I am worried that at some point, this government would remove the exempt status of PPF withdrawal (may be in future budgets).

So I am planning to close off my PPF account and withdraw the full amount when it's still tax exempt.

My question is whether I can reopen a PPF account at a later time?
 
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San Yad

Active member
#2
You can open in banks and link with your saving account for auto deduction of the preferred amount to top up your PPF account annually/quarterly/ monthly etc.

Also you can open at post office anywhere at your convenience.

Happy Investing!
 
#4
Yes you can do it...rule says at any point of time you should have only 1 ppf "active" account... (closed account does not count)

- Also PPF is technically 16 years product (though all advertise it as 15 years)

If you close and reopen you will lose the "compounding" effect of the corpus...
...
As a background..Atalji reduced the PPF interest rates and lost the next election,,,
I don't think Arun jaitley will have the guts to make PPF withdrawal taxable...
Also if he wants to do it he will have to do it in Feb 28/29th of any year..so you can always withdraw in March of that year!!!!
 
#5
If you close and reopen you will lose the "compounding" effect of the corpus...
...
Only if you assume that I am going to keep the withdrawn money under my mattress.

I don't think Arun jaitley will have the guts to make PPF withdrawal taxable...
,,Also if he wants to do it he will have to do it in Feb 28/29th of any year..so you can always withdraw in March of that year!!!!
You can withdraw full PPF only at certain intervals - end of 15 years, end of 20 years etc. In between you cannot close the account or withdraw full money.
 
#6
,,If you can compound your money in a safe instrument (without any tax implications) and with interest rate of 8.5 + ..for periods of 15 years please let me also know....

PPF is the only EEE product with 100% safety....
Bank FD;s (only insured for upto 1 L +taxable interest)....
Equity.....may have de-compounding effect...

...so unless you have a magic mattress which can give better & safe &assured returns than PPF ...I wonder why you invested in PPF ??

Yes you cannot withdraw all of it...but...
opt 1. If you withdraw now..you lose on compounding effect for 1 year
opt 2 You withdraw in the year the announcement is made....you will benefit from compounding of larger corpus and also can withdraw a greater amount than opt 1
 
#7
If you can compound your money in a safe instrument (without any tax implications) and with interest rate of 8.5 + ..for periods of 15 years please let me also know....
That wasn't the point you made earlier. You said it wouldn't compound if I withdrew it. You are changing goal posts now.

PPF is the only EEE product with 100% safety
I know - I have recommended it to 100s of people over the years. Even recommended it to people who don't have taxable income. Recommended people open it for their non working spouses.

However, I have lost faith in this government. Their far left taxation policies means that they can tax, double tax anything at any point.


opt 1. If you withdraw now..you loose on compounding effect for 1 year
Not unless I withdraw and keep it under in my mattress.

opt 2 You withdraw in the year the announcement is made....you will benefit from compounding of larger corpus and also can withdraw a greater amount than opt 1
Not true. If they announce a tax next year & I withdraw it then, I will be able to only with draw 50% of what was the balance 4 years back. That will be far less than what I can withdraw on April 1st this year when I have finished 15 years.
 
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#8
My Final explaination...

Option 1:

You withdraw the full amount on April 1 2016 ...lets say the full amount is
Rs 100
After that you put this money under mattress....
Also open new PPF account

Option 2:
You continue with this PPF account for next 5 years...so your corpus Rs 100 will get compounding effect for one more year ...8.5% of Rs 100=108.5
But say next year budget taxes the accumulated interest on PPF...15+1
In option 1 ..Rs 100 will remain as it is (if kept under mattress)
In option 2... it will be ( Rs 108.5 - tax on interest)

Now in your individual case find out how much the amt is in option 2..in 90% cases it will be more than option 1..since corpus is usually very high and compounding by 1 year will increase with a high amount.

Hope you like the developed/capitalist countries like USA where interest rate is 1% and senior citizens there are literally crying/begging to helen for rate hike.....
You can have everything... high deposit rates,,,no taxes and development of the country...
 
#9
After that you put this money under mattress....
Why do you think I am going to keep it under the mattress? I have repeatedly said that your statement makes no sense unless I keep that money under mattress.

I am guessing that you did not understand what I wrote right from the beginning. Read my posts once more.
 
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