PPF Withdrawal Rules: What You Need to Know
The Public Provident Fund (PPF) is a popular long-term savings scheme in India, offering tax benefits and attractive interest rates. However, PPF accounts come with specific withdrawal rules that account holders must follow. These rules are designed to ensure the account remains a long-term investment vehicle.
Types of Withdrawals Allowed Under a PPF Account
1. Partial Withdrawals:
Partial withdrawals are allowed from the PPF account after the completion of the 6th financial year. An account holder can withdraw up to 50% of the balance at the end of the 4th year or 50% of the balance at the end of the previous year, whichever is lower.
2. Complete Withdrawal:
Complete withdrawal of the PPF account balance is only allowed after the account matures, which is 15 years from the date of opening. At maturity, the account holder can withdraw the entire balance without any penalties.
3. PPF Withdrawal Rules Upon Extension
PPF accounts can be extended in blocks of 5 years after the initial 15-year maturity period. Account holders can choose to extend their accounts with or without making further contributions.
Withdrawal Rules for Extended PPF Accounts
1. Simple Extension Without Contributions:
If an account holder extends the PPF account without making further contributions, they can make one withdrawal per financial year. There is no limit on the amount that can be withdrawn.
2. Extension With Additional Contributions:
If an account holder continues to contribute to the PPF account after extending it, they can make one withdrawal per financial year. The withdrawal amount is limited to 60% of the balance at the beginning of the extension period.
Steps for Partial or Complete Withdrawal from PPF
1. Fill Withdrawal Form (Form C): Obtain and complete Form C for withdrawal from your PPF account.
2. Submit the Form: Submit the completed form to the bank or post office where the PPF account is held.
3. Verification and Processing: The bank or post office will verify the details and process the withdrawal request.
Tax Implications on PPF Withdrawals
Withdrawals from PPF accounts are entirely tax-free. Both partial and complete withdrawals, as well as the interest earned, are exempt from income tax under Section 80C of the Income Tax Act.
Premature Termination of PPF Account
Premature closure of a PPF account is allowed after 5 years from the date of account opening.
It is permitted only for reasons such as the account holder or their dependent suffering from a life-threatening disease, or for higher education purposes.
Premature closure attracts a penalty of 1% reduction in the interest rate applicable for the period the account has been in force.
When can I make partial withdrawals from my PPF account?
You can make partial withdrawals from your PPF account after the completion of the 6th financial year. You can withdraw up to 50% of the balance at the end of the 4th year or 50% of the balance at the end of the previous year, whichever is lower.
Can I withdraw the entire balance of my PPF account before 15 years?
No, you cannot withdraw the entire balance before the maturity period of 15 years. However, partial withdrawals are allowed after the completion of the 6th financial year, and premature closure is possible under specific conditions after 5 years.
Can I close my PPF account before 15 years?
Yes, premature closure of a PPF account is allowed after 5 years from the date of account opening under specific conditions, such as life-threatening diseases of the account holder or their dependent, or for higher education purposes. Premature closure attracts a penalty of 1% reduction in the interest rate for the period the account has been in force.
What happens if I continue my PPF account without making further contributions after 15 years?
If you extend your PPF account without making further contributions, you can still make one withdrawal per financial year with no limit on the amount.
Can I continue to contribute to my PPF account after the initial 15-year period?
Yes, you can continue to contribute to your PPF account after the initial 15-year period by extending it in blocks of 5 years. During this extended period, you can make one withdrawal per financial year, limited to 60% of the balance at the beginning of the extension period.
Is there a limit on the number of partial withdrawals I can make from my PPF account?
Yes, you can make only one partial withdrawal per financial year after the completion of the 6th financial year.