Yes, you can withdraw from your PF, PPF account

When 56-year-old R P Dubey was advised to dip into his Public Provident Fund (PPF) account for his daughter's wedding, he was surprised. He had no clue he could withdraw money from his PPF account.

"In this case, it may not be a bad option. But individuals should first try and break short-term, taxable investments like fixed deposits or equity-linked saving schemes (ELSS)," says Suresh Sadagopan, a certified financial planner.

While it is suggested that withdrawals and loans against long-term instruments are not the wisest steps, if you really need to do so, like Dubey did, here are a few options. . .

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Employees' Provident Fund (EPF)

Premature withdrawals can be made from your EPF corpus for the following:

Marriage/education: You must have completed at least seven years of service to get 50 per cent of your contribution for your/children/siblings' wedding, or your/children's education, three times during your service.

Treatment: Any time during your service, you can encash your entire EPF contribution or the equivalent of six times your salary (whichever is less) for your/children/spouse/parents' treatment for a month.

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Purchase or construction of house: After five years of service, once in the entire tenure, you are allowed to withdraw a sum 36 times your salary for buying a property, provided it is in your/spouse's name or jointly owned.

Repayment of housing loan: After 10 years of service, once in the entire tenure, you are allowed to withdraw a sum 36 times your salary.

Purchase of plot: After five years of service, once in the entire tenure, you are allowed to withdraw a sum 24 times your salary.

Addition/alteration of house: After five years of service, once in the entire tenure, you are allowed to withdraw a sum of 12 times your salary. You can withdraw up to 90 per cent of the total corpus at credit after attaining 54 years, or one year before retirement on superannuation, whichever is later.

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Public Provident Fund

You can make a partial withdrawal after five financial years from the end of the year in which the initial subscription was made, or from the seventh year. The amount of withdrawal is 50 per cent of your account balance.

No loan is provided against PPF as it is an account and not an instrument. Also, according to the law, no authority is allowed to freeze your PPF account, except to set off your income tax.

Senior Citizen Savings Scheme (SCSS)

Premature withdrawal is permitted five years from the date of opening an account after deducting the penalty. "The law says if any amount, including the interest accrued, is withdrawn from SCSS, it is taxable," says Kaushik Mukherjee, executive director, PricewaterhouseCoopers.

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Post Office Deposit

You can encash up to 50 per cent of balance after one year from a five-year Post Office Recurring Deposit account.

From a Post Office Monthly Income account, premature encashment is allowed after one year. But, there is a deduction of two per cent of the deposit if withdrawal is made before three years. After three years, one per cent of the deposit will be deducted for premature withdrawal.

Other instruments like National Savings Certificate, five-year fixed deposits and ELSS cannot be used to raise cash. You will have to break the investment to withdraw from these instruments and pay a small penalty on the same.

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Taxation

If you withdraw after the mandatory lock-in, the sum will be exempted. However, in an urgent situation, you can withdraw from these instruments even before lock-in is applicable.

"Then it will be added to your salary and taxed according to the applicable tax slab," says Mukherjee.

The EPF amount is also taxable for individuals who quit their existing company before five years and withdraw the corpus.