PPF Withdrawal Rules and Process
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PPF stands for Public Provident Fund, which is a long-term savings and investment instrument offered by the Government of India. It is a popular savings scheme known for its tax benefits and assured returns.
This investment product comes with a lock-in period of 15 years, post which you can make a withdrawal. The interest rate, as of FY 2024, stood at 7.1%, providing investors with competitive returns compared to other low-risk investment avenues.
PPF Withdrawal on Maturity
There are no rules for withdrawing money from a PPF account after maturity. For the same, you must visit the respective bank or post-office with which you have your account and submit a duly filled Form C. Alternatively, investors could opt for online withdrawal of their PPF account.
Your PPF account will be closed once you withdraw your accumulated sum, including the interest. However, closing your PPF account on maturity is not mandatory. You can extend your PPF account in five-year blocks after maturity, with no limits on extensions.
PPF Extension on Maturity
Once you have extended your PPF account by five years, you can choose to either continue or halt your contributions. In either case, there are certain conditions that you need to meet.
1. PPF Extension without Contributions
When a PPF account matures, investors can keep it active without further contributions instead of closing it. This allows you to earn interest on the balance amount until you close the account.
2. PPF Extension with Contributions
If you want to extend the duration of your PPF investment, all you have to do is fill out the required form and submit it to your bank/post office. However, to keep your account active, you will have to submit this form within a year of your account’s maturity.
If you let your PPF account remain inactive for over a year post-maturity, you won’t be allowed to make further contributions to it.
PPF Withdrawal Rules after Extension
PPF account withdrawal rules after extension vary, and there are some special conditions you need to meet. Here is an overview of these terms:
1. Withdrawal after Extension without Contribution
Once you've extended the tenor by five years, withdrawals are limited to the available balance. In this case, only one withdrawal per year is permitted.
2. Withdrawal after Extension with Contribution
Following the account extension, withdrawals are limited to 60% of the balance accrued at the extension time, spread over the subsequent five years. Additionally, only one withdrawal is allowed annually.
3. Partial/Premature Withdrawal
Withdrawals from PPF become available from the 6th financial year onwards. Partial withdrawals incur no tax and are limited to once per fiscal year.
Conditions for Complete Premature Withdrawal Before Maturity
The premature withdrawal rules for PPF account specify that a complete withdrawal before the end of the tenor is permissible only under specific circumstances:
Medical treatment of the account holder or dependent (spouse, parents, or children) for life-threatening diseases
Payment for higher education of account holder or their children
Residency change of the account holder
Here are some additional factors you must consider before opting for PPF premature withdrawal:
Premature closure is allowed after six years, from the seventh year
Premature closure of reduces interest by 1%
Withdrawal Limits for PPF Accounts Before Maturity
As per the PPF withdrawal rules, you get a partial payout only if your account has completed five years of investment. You can withdraw up to 50% of the PPF account balance from the previous or fourth financial year, whichever is lower. These withdrawals are limited to once in a fiscal year.
Additionally, if you have an outstanding loan against your PPF, you must repay the same to be eligible for a partial withdrawal. In case you are making a partial withdrawal from the account in the name of a minor or a person of unsound mind, you must submit a declaration.
PPF Partial Withdrawal Process
If you want to make a partial withdrawal from a PPF account, you need to follow these steps:
Obtain the PPF Withdrawal Form (Form C) from the bank's website or at the nearest branch
Include a copy of your PPF passbook with Form C
Submit the completed form and passbook copy at your bank branch
When it comes to PPF withdrawals, online services are limited. You can only download the relevant form from the official website. All steps thereafter have to be carried out offline.
Tax Benefits on PPF
PPF falls under the Exempt-Exempt-Exempt (EEE) category, ensuring all deposits are deductible under Section 80C of the Income Tax Act, 1961. This includes tax exemption during investment, interest accrual, and maturity. However, PPF contributions cannot exceed ₹1.5 Lakhs annually.
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