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About PPF Premature Withdrawal
There are some rules and pre-conditions as far as withdrawal of PPF amount is concerned. It is important to know about this withdrawal process, taxability, premature withdrawal, loan facility, etc. before you withdraw it.
After 15 years
The full amount along with the interest that has been generated
After 5 years
For education or medical treatment
The full amount
Up to 50% of the balance that is available
Investors will be able to opt for premature closure only after the completion of 5 financial years. Premature closure is allowed only under the below-mentioned grounds:
In case you wish to withdraw the PPF amount completely or partially, you must submit Form C at the relevant bank or PPF post office. Given below are the three sections that are present in Form C:
A PPF account can be closed prematurely under special situations, provided the account has completed five years. A PPF subscriber is allowed premature closure of his/her account or the account of the minor of whom he/she is the guardian if that amount is required for the treatment of life-threatening disease of the account holder, spouse or dependent children or parents on the production of supporting documents. Premature closure is also allowed if that amount is required for the higher education of the account holder or the minor account holder on production of documents in confirmation of admission in an institute of higher education in India or abroad.
Here are some of the rules surrounding premature withdrawal:
Public Provident Fund (PPF) is a preferred investment option for investors looking to create a long-term retirement fund. It comes with a low risk factor, moderate returns, and added tax benefits and these make PPF an attractive option for investment. PPF has a 7.1% rate of assured returns and it fares at par with nominal returns paid by bank fixed deposits (FDs), the additional tax benefits subject to the investment cap of Rs. 1,50,000 offered by PPF makes it look better than the other forms of investments. Also, the PPF deposits are government-guaranteed which makes it safer than financial instruments like FD’s.
1. When Can Partial Withdrawals from PPF Begin?
Partial withdrawals can be made, from the start of the 7th financial year after the account has been created. It is important to keep in mind that the timeframe taken into consideration is “financial year” which is from the 1st of April – to the 31st of March the next year.
2. What is the PPF Maturity Duration?
The PPF account attains maturity in 15 years from the date on which it was created.
3. Is it Possible to Prematurely Close a PPF Account?
No, a PPF account cannot be prematurely closed for any reason except the death of the account holder. Premature withdrawals, however, can be made under special circumstances.
4. What is the PPF lock-in period?
Investments made to a PPF account have a lock-in period of 15 years. However, individuals can make a partial withdrawal from the PPF account after 5 years from the date of opening the account.
5. Can I withdraw PPF after 5 years?
The Government has amended the PPF scheme and propagated some positive changes regarding the withdrawal of balance from the account. You can now withdraw the whole amount and close your PPF after 5-years.
PPF accounts have very strict rules and procedures regarding the withdrawal from them. It is important to know about this withdrawal process, taxability, premature withdrawal, loan facility, surrounding PPF account. One is allowed to withdraw up to 50% of the PPF account balance after completion of five years from the end of the subscription year. Withdrawals are tax-free.
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