Query on PPF account interest calculation and tax benefit?

[Feroze]

If I withdraw an amount from my PPF account after fifth of a month and deposit a portion of the same in the account on the same day, will I be able to claim interest on the amount deposited after 5th of the month i.e. for the amount withdrawn and deposited on the same day after 5th of the month? Whether I will be allowed tax benefit for the amount withdrawn and deposited on the same day as deposit?

[v.r.s.nathan]

The PPF interest is calculated monthly for the lowest balance between 5th and the end of the month. So keep in mind to deposit before 5th of the month which you wish to deposit to avail the interest for the month. If you withdraw after 5th and deposit same, so in technical terms the amount with be less for a while and it will be taken as lowest amount for calculation of interest.

Whether I will be allowed tax benefit for the amount withdrawn and deposited on the same day as deposit? Yes, you can take benefit on all the deposited amount for that financial year. Even if you withdraw all.

[Harish Rawat]

When you withdraw it will reduce with that amount and again it will be same when you deposit it. So to fool the system, deposit first and then withdraw. Eaxmple - Currect balance 100,000. Deposit - 5000/-(balance =1,05,000) and then withdraw - 5000 /- (balance =1,00,000).

[Master]

Tax Rebate on PPF A/C -
Even if the contribution is made on the last day, the tax rebate still holds though no interest on the amount will be earned.