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.
Once you have extended your PPF account by 5 years, you can choose to either continue your contributions or not make any further contributions. In either case, there are certain conditions that you need to meet.
When a PPF account matures, investors have the option to keep the account active without making any further contributions instead of closing it. This allows you to earn interest on the balance amount until you close the account.
If you wish to keep your account active and continue making contributions, you can do so by opting for an extension of five years. Note that there is no limit on the number of times you can take such extensions. However, they must be in blocks of five years.
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.
Also note that once you submit the request for an extension with contributions, you cannot withdraw the request in the future.
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.
As per the norm, you can withdraw the entire sum invested in PPF only after its maturity, i.e., post 15 years. However, in some circumstances, you can choose to make partial withdrawal from your PPF account or close the account before the tenor ends.
Remember, you can carry out PPF premature closure or partial withdrawal only if you meet the stipulated conditions.
You can make a complete withdrawal from your PPF account once the 15-year lock-in period ends. However, the PPF premature withdrawal rules state that you can make a complete withdrawal before the end of tenor only under certain circumstances, as listed below:
Treat a life-threatening disease (applicable only to the account holder, their parents, spouse, or dependent children)
Pay for your or your dependent children’s higher education
Change of residency status
Note that you cannot prematurely close the account before the end of 5 years from the end of 1 year from the date of account opening. This means that you can prematurely close the account only after completing 6 years, i.e., from the seventh year.
Note that if you go for a premature PPF account closure, your interest rate will reduce by 1%.
As per the PPF withdrawal rules, you get a partial payout only if your account has completed five years of investment. You can take out 50% of the corpus available in your PPF account at the end of the fourth year or the preceding year, whichever is lower.
Moreover, PPF partial withdrawal rules also state that you can only make such transactions once in a financial year. Additionally, if you have an outstanding loan against your PPF, you will need to repay the same to be eligible for a partial withdrawal.
To make a partial withdrawal, you will be required to submit Form 2. If you are making a partial withdrawal from the PPF account in the name of a minor or a person of unsound mind, you will need to submit a declaration.
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.
If you wish to invest in mutual funds, you can compare and choose from over 1,100 direct mutual fund plans available on Bajaj Markets. With an entirely digital process, you can invest your funds in your preferred instruments quickly and without any hassles.
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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.