As a government-backed scheme, PPF or Public Provident Fund is a popular investment option for retirement. Currently, the scheme offers an interest rate of 7.1% with permissible minimum and maximum investment amounts of ₹500 and ₹1.5 Lakhs per year, respectively.
PPF comes with a lock-in period of 15 years. However, there may be an instance where you would have to withdraw from your PPF account. While PPF withdrawal is permissible, there are certain rules and conditions which you should know beforehand.
Read on to learn more about the PPF withdrawal rules, the circumstances where you can withdraw, and more.
The Public Provident Fund (PPF) comes with a lock period of 15 years post which you can make a PPF withdrawal. There are no rules for withdrawing funds from a PPF account after maturity. You can do this by visiting the bank/post office with which you have your account and submitting a duly filled Form C.
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, and you can extend the term in five-year blocks.
PPF account withdrawal rules after extension vary, and there are some special conditions you need to meet. Here is an overview of these terms:
If you opt to extend your PPF account without making any contributions, you need to make one withdrawal every year. The balance will keep earning the normal interest.
You can make a partial withdrawal from your account, subject to a limit of 60% of the balance at the start of the block period.
If you want to make a partial withdrawal from a PPF account, you need to follow these steps:
Get Form 2 (application form for PPF withdrawal) from your bank/post office
Fill this form with accurate details
Submit the application to your bank branch or post office
To prematurely close your PPF account, follow these steps:
Get the relevant form from your bank or post office
Fill out the form
Submit it to your bank or post office branch
When it comes to the PPF withdrawal, online services are limited. You can only download the relevant form from the official website. All steps thereafter have to be carried out offline.
PPF is an investment avenue under the EEE category. This means that your investment in this account is exempt from tax under all three circumstances – when you make the investment, when you earn interest on it, when you get the maturity amount. Given this, there is no tax on PPF withdrawal.
Provident funds are the best investment option for you if you want to enjoy government-backed security. However, for wealth generation, you would need to invest your money in market-linked schemes.
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No, you can close your PPF account only after completing five years of investment. Note that PPF premature closure is permissible only under certain conditions.
As per the PPF withdrawal rules, you can take out funds by visiting your bank’s branch or its online portal. Here, you must fill out and submit the required form to complete the PPF withdrawal procedure.
PPF falls under the EEE category of investment. It means that the amount you invest, earn, and maturity sum are all exempt from taxation. However, you can only claim up to ₹1.5 Lakhs as a deduction.
Yes, you can either make a PPF withdrawal or opt for an extension of your PPF account after its maturity. You can choose to extend the account term with or without deposits, both having separate conditions.
NRIs can withdraw from a PPF account the same way as resident Indians. They need to submit the relevant documents to the bank or post-office branch.
The maturity period of the PPF account is 15 years. However, you can extend it and continue to earn interest on it. If you choose to extend with contributions, you can extend the tenor only in a block of 5 years.
Yes, the PPF scheme allows account holders to make partial withdrawals from the seventh year of account opening. You can prematurely withdraw up to 50% of the balance amount after the completion of the fourth year (prior to the year in which the amount was withdrawn or towards the end of the previous year, whichever is lower). Also, account holders can only make only one withdrawal during the financial year.
You are only allowed to make partial withdrawals from your PPF account at the completion of 6 years from account opening. However, you have the option to prematurely close your account and withdraw the entire amount after the 5th year of account opening under special grounds.
You can partially withdraw up to 50% of the available balance in your PPF account from the 7th year of account opening.
Withdrawals made from PPF accounts are exempt from taxes under the provisions of Section 80C of the Income Tax Act, 1961. This is because they come under the EEE category of investments.