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PPF Withdrawal Rules

The Public Provident Fund or PPF, as we commonly call it, is one of the best investment tools for investors who are looking for good returns across long-term investment horizon. The PPF scheme was introduced in India in the year 1968 with a motive to mobilize small scale savings in order to promote savings and offer attractive returns on them. The Public Provident Fund scheme is more of investment – cum – tax saving tool that helps the investors to create a lump sum corpus that can be utilized to overcome financial needs arising during the post-retirement phase. This article will help us understand about the PPF withdrawal Rules.

Rules of PPF

Public Provident Fund is a good investment tool that offers attractive interest rates. But this scheme comes with stringent terms and conditions which are binding on the investors. Following are the key rules of PPF account-

  • PPF account has a duration of 15 Years
  • Complete withdrawal of funds from the PPF account is possible only after 15 years
  • Premature closure in case of medical contingency is allowed after 5 years
  • Partial withdrawal of funds from the account is allowed after completion of the lock-in period i.e. 5 years.

The following table illustrates the rules related to withdrawal of funds from the PPF account.

Fund Withdrawal TypeDurationReasons for withdrawalAmount
Complete withdrawalAfter completion of 15 yearsAnyEntire accumulated Corpus
Partial WithdrawalAfter Completion of 5 YearsAny50% of the accumulated fund
Premature Closure of AccountAfter completion of 5 yearsOn grounds of medical contingency, higher educationEntire accumulated corpus

PPF Partial Withdrawal

There are certain terms and conditions related to the partial withdrawal under the Public Provident Fund scheme. If you are an investor of PPF, then you can partially withdraw funds from your PPF corpus. However, any such partial withdrawal of funds from the PPF account can be done keeping in mind the following mentioned points. So, if you wish to partially withdraw your funds from you PPF account, it’s vital to get complete understanding of the below given key pointers.

  1. The facility of partial withdrawal of funds from the accumulated corpus is possible.
  2. The said facility is available to the investor only after the PPF account complets 5 years from the date of its inception.
  3. After completing the 4th financial year, you can withdraw up to 50% of the total available balance present in the PPF account.
  4. Kindly note that you are allowed only one partial withdrawal facility per financial year.
  5. The process for carrying out partial withdrawal of funds from PPF account includes submission of duly filled application form along with PPF account passbook.
  6. Upon receipt of request regarding partial withdrawal, your PPF account Bank or concerned post office branch shall carry out verification.
  7. Once all the provided details related to PPF account are verified, your concerned bank branch or post office branch shall permit partial withdrawal facility.
  8. You are not required to pay any tax on the amount received on account of partial withdrawal as this amount is free from the tax ambit, i.e. the amount partially withdrawn from the PPF account is tax-free.

Thus, above are the key high pointers that every investor holding a Public Provident Fund account must keep in mind in case of partial withdrawal of funds from their PPF account.

PPF Complete Withdrawal

The rules related to the complete withdrawal of funds from the PPF account are different from the rules related to partial withdrawal of funds from the bank account. Let us understand what are the key terms and conditions related to complete withdrawal of funds from the PPF account.

According to the Public Provident Fund, in the terms and conditions, one of the most important rule states that any investor investing in the PPF account can completely withdraw the funds from the PPF account only after completing the 15 years of the lock-in tenure. The main motive of PPF account has always been to promote savings. So, an important term related to complete withdrawal of funds from the PPF account is that any investor can perform complete withdrawal from the PPF account once the lock-in period of PPF account of 15 years is completed. Upon completing the 15 years, you can close your PPF account and take away the accumulated corpus by completely withdrawing the entire contribution along with the interest earned thereon. Following are the ways in which complete withdrawal of funds can be done from the PPF account.

Withdrawal of PPF amount due to an automatic extension

Complete withdrawal of accumulated corpus is possible only after completing 15 years. But in case if you forget to close your PPF account and are not able to withdraw the accumulated corpus, then do not worry as your PPF account get an automatic extension of 5 years, post which you can completely withdraw your invested money. The PPF account allows extension of PPF account for 5 years in case you do not close or withdraw the PPF amount. However, you shall be entitled to receive an interest on the accumulated corpus throughout the period of extension. This extension of 5 years is not just allowed in case of non-closure of PPF account, but also when an investor wishes for extension. The extension of 5 years is offered by banks or post office for one or more times as per the wish of the investor.

Withdrawal of PPF amount after a simple extension

Once your PPF account has received an extension of 5 years, it will continue to earn interest on the accumulated corpus. However, the amount accumulated in the PPF account is available for complete withdrawal at the time of PPF account maturity. Kindly note, every investor shall be allowed to make ONE withdrawal per financial year in the extension period.

Extension of PPF account by making contributions

As the name suggests, under this scheme, you are allowed to make contributions to your PPF account during the extension period of your PPF account. Under this scheme, you can extend the tenure of your PPF account by 5 years and simultaneously, you are allowed to contribute in your PPF account. All the contributions made in the PPF account during the extended period is eligible for earning interest. Thus, under such extensions, any contribution made by you in your PPF account shall generate income by the way of interest.

However, for availing this benefit, you are required to submit an application called as ‘FORM H’ in you bank or post office (where you are holding your PPF account). Kindly note, this FORM H must be submitted at least ONE year prior to the date of maturity of your PPF account. In case you fail to submit FORM H in the prescribed manner to your bank or post office, your account shall get an extension, but you shall not be allowed to make any further contributions to your PPF account. Kindly note, if you make contributions to the account without submitting FORM H, your account shall be deemed as irregular, and you shall not receive any tax benefit available u/s 80C for any such contributions to your PPF account.

Withdrawal of PPF amount after extension with contributions

If you have extended the date of maturity of your PPF account and have availed for extensions with contribution facility by submitting FORM H, then you are allowed to withdraw up to 60% of the balance fund from your PPF account which was present at the time of extension of the PPF account. However, you are allowed only ONE withdrawal in one financial year from your PPF account.

Thus, above are the terms and conditions related to complete withdrawal of funds from your PPF account. It is recommended that every investor understands the conditions related to complete withdrawal of funds related to PPF account investments.

Premature Closure of PPF Account

Public Provident Fund account is created to promote investment and savings, so that all investments in the account are locked for 15 years. However, premature closure of your PPF account is possible. Premature closure of PPF account is possible only if your PPF account has completed 5 years and is subject to certain conditions. You shall be able to prematurely close your PPF account pertaining to following conditions and grounds:

  • In case of medical contingencies: Premature closure of the PPF account is allowed in case of medical contingencies occurring to the account holder himself, his / her spouse, or children. Thus, any person mentioned above are suffering from a medical conditions or serious ailment or require medical treatment for a life-threatening disease can apply for premature closure of the PPF account.
  • Higher Education: You can apply for premature closure of your PPF account for paying fees towards your child’s higher education. However, for such premature closure, the bank or post office shall demand for relevant documents confirming the admission of your child at the university / college for higher education.

Thus, in this manner, you can apply for premature closure of your PPF account. However, kindly note that 1% penalty shall be levied on such premature closure. The bank or post office shall deduct 1% interest rate from the actual interest rate offered for the PPF account. For example, if your PPF account earned interest at 8.5% ROI on the contributions made towards the PPF account, then in case of premature closure, a penalty of 1% shall be charged and the rate of interest on the PPF account shall be reduced to 7.5%.

PPF Withdrawal Process for NRIs

Public provident fund accounts are for resident Indians. Non-resident Indians are not allowed to open a PPF account. However, if a PPF account was opened before an individual received the status of NRI, the PPF account shall continue till the date of maturity. On maturity, the NRI must close the account and withdraw the accumulated corpus. Also, closure and withdrawal of funds from PPF account on the date of maturity is mandatory as NRIs PPF account cannot be extended.

PPF Tax Benefits

Your PPF account is eligible for tax benefit under Section 80C of the Income Tax Act, 1961. Maximum contributions allowed in a PPF account is Rs. 1.50 Lakhs per year, so the individuals investing in PPF account can claim tax benefit of the invested amount up to the given limit. Also, the interest earned on the investments under PPF account is tax-free. Similarly, all the maturity proceeds which includes invested amount and interest are free from tax ambit i.e. no income tax is levied on this amount. Thus, your Public Provident Fund account offers you triple tax benefits namely: Tax Deductions on the investments made under the PPF account, Tax – free returns on maturity, and No Tax on interest earned. Thus, investing in PPF account is beneficial for investors who are looking for tax-free investment tools.

FAQs on PPF Withdrawal Rules

Can I withdraw money from my PPF account?

Yes, you can withdraw money from your PPF account on the date of maturity of your PPF account. Alternatively, you can withdraw a partial amount of the accumulated fund after your PPF account completes 5 years.

Can I withdraw money from PPF account before maturity?

Only Partial withdrawal of money is allowed from PPF account before maturity. You cannot completely withdraw money from your PPF account before maturity date.

Can I withdraw money from my PPF account after 5 years?

Yes, you can partially withdraw money from your PPF account after completing 5 years of PPF account. Up to 50% of the accumulated fund can be withdrawn from your PPF account.

When can we withdraw PPF amount in SBI?

You can completely withdraw your accumulated funds from your SBI PPF account on completing 15 years. Alternatively, if you wish to partially withdraw certain sum of money then you can carry out partial withdrawal after your SBI PPF account completes 5 years.