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Learn about the Public Provident Fund (PPF) withdrawal rules. Explore the conditions for premature withdrawal, the withdrawal process, and more.
The Public Provident Fund, or PPF, is a government-funded long-term savings system. It helps you build a retirement fund. One major benefit is that it offers tax-free interest, which increases every year. The PPF account allows you to decide how much to invest and for how long. The PPF scheme offers an annual interest rate of 7.1% for the April–June 2025 quarter.
However, there are specific rules for withdrawing money that you need to be aware of. Understanding PPF withdrawal rules helps you access funds as needed. It ensures you comply with government guidelines.
The Government of India sets the withdrawal rules for your PPF account. These rules give you flexibility, letting you access your invested money when you need it. Here's a quick overview of how and when you can withdraw funds:
Partial Withdrawal Rules
You need to follow the following rules to conduct a partial withdrawal from your PPF account:
You can make a partial withdrawal after completing 5 years from the date of account opening
You can withdraw a maximum of 50% of the balance standing at the end of the fourth financial year prior to the year of withdrawal
The account will remain active even after partial withdrawals, and you will continue to earn compounded interest on the remaining balance
You are allowed to make only one partial withdrawal per financial year under this rule
Premature Withdrawal Rules
You can make a premature withdrawal from your PPF account only under specific conditions. This usually applies to emergencies like medical bills, education fees, or a change in residency:
You must complete at least 5 financial years from the date of account opening before you are eligible for an early withdrawal
Premature withdrawal may lead to a loss of interest or a penalty
If you withdraw early, the interest on the withdrawn amount is reduced by 1% from the original rate, from the time of deposit to the time of withdrawal
Withdrawal Rules After Maturity
You can enjoy the full benefit of the PPF investment after its complete maturity. Here are the key highlights associated with it:
You can withdraw the full balance after the 15-year maturity period
You can also choose to extend your PPF account in 5-year blocks, with or without further contributions
The government does not impose any penalties or deductions on the maturity amount
You continue to earn interest during the extension period as long as you keep the account active
You can close your PPF account before maturity by applying to the designated accounts office. Note that early closure is allowed only under specific conditions:
Disease
Early closure is allowed if you, your spouse, dependent children, or parents face a life-threatening illness. Submit medical reports and supporting documents issued by the treating doctor.
Higher Education
The account can be closed if you or your dependent children are pursuing higher education. Submit the admission confirmation letter and fee receipts issued by a recognised institution.
Change in Residency Status
A change in residency status allows for premature closure. Submit supporting documents such as a passport, visa, or income tax returns as proof.
Essential Factors to Keep in Mind
Premature closure is allowed only after 5 financial years. Note that the interest rate on the account will be reduced by 1% upon premature closure.
To take out money from your PPF account before or after maturity, you need to follow the steps below:
Get the withdrawal application form (Form 3/Form C) from the post office or bank where your PPF account is held
Fill out the form with the required details
Submit the completed form to the same branch of the bank or post office
Form 3 or Form C contains three sections that you need to understand:
Section 1 (Declaration)
Enter the following details:
PPF account number
Withdrawal amount
Number of years since the account opened
Section 2 (For Office Use)
This section includes:
Account opening date
Current balance
Previous withdrawal dates
Available withdrawal amount
Sanctioned withdrawal amount
Signature of the authorised official
Section 3 (Bank Details)
In this section, you need to provide:
Bank information where the withdrawn amount should be credited or the cheque/demand draft issued
PPF rules offer flexibility, making the account a useful financial instrument during emergencies. However, the actual benefit of a PPF account comes from allowing compound interest to grow the funds over the full 15-year term. You need to withdraw before maturity only when it is absolutely necessary.
It is advisable to maintain the PPF account as a long-term investment by avoiding premature withdrawals.
You may withdraw a portion of your money only after your PPF account has been active for 5 complete financial years. However, you have to follow certain additional rules.
In such a case, you have to accept a lower interest rate than the standard one. Penalties will also apply.
You can withdraw money online from PPF account once every financial year. After maturity, you have no restriction on the number of withdrawals during the extended period.
No, PPF accounts are tax-free. But make sure you follow the set limits to avoid any tax implications.
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