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PPF Withdrawal Rules

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.

Type of withdrawalDurationGroundsAmount that can be withdrawn

After maturity

After 15 years

No criteria

The full amount along with the interest that has been generated

Premature closure

After 5 years

For education or medical treatment

The full amount

Partial withdrawal

After 15 years

No criteria

Up to 50% of the balance that is available

PPF Premature Withdrawal

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:

  • If the account holder, his/her spouse, or children are suffering from a serious disease or require treatment for a life-threatening ailment.
  • To pay for a child’s higher education. In such a case, documents that confirm the admission of the child at the university or college must be submitted.
  • 1% penalty is levied from the actual rate of interest that was given by the account. For instance, if the individual was earning an interest of 7.1% on the contributions that are being made, in case he/she closes the PPF account prematurely, the rate of interest will be reduced to 6.1%.

PPF Amount Withdrawal Process

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:

  • Form C Declaration section: Under this section, you must give details of the PPF account number and the reason for the withdrawal of the PPF amount. You will also need to give details about the number of years the account has been open.
  • Bank details section: Within this section, the details of the bank where the amount must be credited to needs to be filled. Details of the cheque or demand draft that is being issued can also be filled in this section.
  • If the account holder is a minor, he/she must be alive, and details of the minor must be submitted.
  • The bank or office will do a thorough verification before processing the withdrawal request.

Reasons for Premature PPF Withdrawal

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:

  • Due to an automatic extension - After completing 15 years of PPF account opening, you will be able to extend the PPF account by 1 or more blocks. Each block consists of a period of 5 years. In case you do not withdraw the PPF amount or close the account, it will get automatically extended. However, interest will be generated on the total amount that has been accumulated in the account.
  • Simple extension – In case of an extension of the PPF account, you will be able to withdraw the amount that was available in the account at the time of maturity. Only one withdrawal is allowed in a financial year.
  • Extension of PPF account via contributions – Extension of the PPF account with contributions is allowed under the scheme. By extending the PPF account, you are allowed to make contributions and interest will be generated on the contributions made towards the account as well.

About PPF

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.

FAQs

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.

End Note

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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