PPF Withdrawal Rules – Rules, Process and Tax Implication
PPF Withdrawal Rules
The table given below will explain the PPF account withdrawal rules along with their duration, reason and amount.
| Withdrawal Rule or Type | Duration | Reason for Withdrawal | Amount |
| Post Maturity | After 15 Years | None | Whole amount, along with the interest |
| Partial Withdrawal | From the starting of the 7th Year | None | 50% of the available amount |
| Premature Closure | After 5 Years of Account Opening and Before 15 Years | Educational or Medical | Whole amount |
Change in Rules for Loan against PPF
Earlier, you could take loan against your PPF balance from the third financial year with an interest rate above 2% above the current PPF interest rate. The interest rate has been changed to 1% (above the current PPF rate). You can take 25% of your PPF balance as a loan. In the event of the demise of the account holder, the nominee has to pay the interest on the loan.
PPF Withdrawal Rules on Maturity: Process to Withdraw PPF Amount
The following section talks about PPF account withdrawal rules after 15 years i.e. withdrawal upon maturity.
PPF comes with a maturity period of 15 years. After the end of this tenure, you can withdraw the whole amount. You have to submit Form C at the bank or post office linked with your PPF account. The PPF withdrawal form primarily has 3 sections or steps:
- Declaration
In the first step, you have to declare PPF withdrawal. For this, you need to provide your account details and the amount you wish to withdraw. You must mention how many years the account has been active. In case you’re withdrawing money from a minor’s PPF account, their name should be mentioned in the first section of the PPF withdrawal form.
- Details Required for Official Use
The second section is for official use. This section has the following details:
1. Date of opening of the PPF account
2. Amount sanctioned for withdrawal
3. Total amount available in your PPF account at the time of withdrawal
4. Amount available for withdrawal in line with paragraphs 9(1), and 9(3) of the PPF scheme
5. Date of approval of your previous withdrawal if you have withdrawn money from your PPF account
6. Signature of the concerned person in charge and the date - Completion of PPF Withdrawal Process
Once you have filled out the form, your signature will be required. Once done, enclose your PPF passbook along with this application form. Add a revenue stamp and sign the form.
Well, that completes your PPF withdrawal process. Your approved PPF amount will be directly credited into your savings account of the relevant bank. Alternatively, you can also request a demand draft.
PPF Withdrawal Before Maturity
The following section talks about PPF withdrawal rules before maturity.
Partial withdrawal from PPF can be made upon the completion of 5 years from the date of opening the account. Note that you can only make one partial withdrawal per financial year. For partial withdrawal, you can withdraw 50% of the amount accumulated till the completion of the 4th financial year. To complete the process, you have to get your PPF withdrawal application form verification of the application form and passbook This may sound confusing to many, so we have broken down the process:
1. Time of Withdrawal
Beginning of the 6th financial year from the date of account opening
2. Amount that can be Withdrawn
Up to 50% of the balance available after the completion of the 4th financial year from the date of account opening
3. Tax Implications
Proceeds earned from the premature or partial withdrawal of PPF are not taxable
Also Read
Premature Closure of PPF Account
You can close your PPF account before the maturity period of 15 years. Note that premature closure of PPF is allowed only after the completion of the 5th financial year from the opening date of the PPF account. A penalty of 1% reduction would be levied on the applicable PPF interest – this is applicable for the period till which the account was held.
However, certain conditions are to be met for premature closure of the PPF account.
- For critical medical emergencies of spouse, parents or children
- To meet the higher education requirements of the account holder or their children
- In the event of the death of the account holder
You need to provide supporting documents to request for premature closure of your PPF account.
The following table will help you understand premature closure calculation.
| Financial Year | Opening Balance (Rs) | Deposit Amount (Rs) | Actual Rate of Interest | Premature Closure Rate of Interest (-1%) | Closing Balance (Rs)(approx.) |
| 2015-2016 | 0 | 1,00,000 | 8.70 | 7.70 | 1,07,700 |
| 2016-2017 | 1,07,700 | 1,00,000 | 8.10 | 7.10 | 2,22,446 |
| 2017-2018 | 2,22,446 | 1,00,000 | 7.80 | 6.80 | 3,44,372 |
| 2018-2019 | 3,44,372 | 1,00,000 | 7.80 | 6.80 | 4,74,589 |
| 2019-2020 | 4,74,589 | 1,00,000 | 8 | 7 | 6,14,810 |
| 2020-2021 | 6,14,810 | 1,00,000 | 7.10 | 6.10 | 7,58,413 |
PPF Withdrawal Rules on Extension
After completion of the 15-year tenure, if you wish, you can extend your PPF account for one or more blocks of 5 years each. It’s not necessary to make contributions during the extended period. Let’s understand PPF withdrawal rules for extension of accounts in detail.
1. Without Contribution
After the maturity period is over, you can extend your PPF account without making any new deposits or contributions. The available money in the account would continue to earn interests per the rate applicable. You can withdraw any amount from the PPF account once in every financial year. However, do note that if you continue without any new contributions for more than 1 year (during the extended period), you won’t have the option to make fresh contributions to your account ever again.
2. With Contribution
Upon maturity, you can extend your PPF account with fresh contributions of one block or multiple blocks of five years. To extend your PPF account, you need to inform the bank or post office with whom you have your PPF registered. This has to be done one year before the date of account expiry. You won’t be able to make fresh deposits in your extended PPF account if you fail to inform your bank/post office within one year from the date of maturity.
Once you continue your account with fresh deposits, you can withdraw a maximum of 60% of the balance accumulated at the time of extension in one block of five years. This can be done as a one-time withdrawal or via yearly instalments. But there’s a catch – you must submit Form H, failing which would result in deposits not earning any interest. In such instances, the proceeds earned would be disqualified for tax rebate under Section 80C.
Tax Implications on PPF Withdrawal
- Partial withdrawal of PPF are not taxable
- PPF is enlisted under the Section EEE (exempt-exempt-exempt) of the Income Tax Act and doesn’t attract tax on principal amount, interest, and maturity amount
- Proceeds received upon fresh contributions made towards extended PPF account are tax-free
Note that PPF contributions allow investors to claim deductions of up to ₹1.5 lakh under Section 80C.
Final Word
PPF offers one of the best deposit rates in the savings scheme category. Also, you get to enjoy assured returns on your PPF investment. Hence, it’s recommended not to close your account before the maturity date. Instead, to address financial emergencies, you can always apply for an instant cash loan. This would help you meet your cash crunch without breaking your savings.
FAQs
Form C is the PPF withdrawal form used for partial withdrawal or withdrawal on maturity. This form has two sections — basic details and acknowledgement.
According to PPF withdrawal rules, you can withdraw up to 50% of the accumulated amount at the end of seven years. To make a withdrawal, you have to submit an application along with the passbook to the respective bank or post office.
One can deposit more than Rs 1.5 lakh in the PPF account. But that amount will not earn any interest or is not eligible for any tax benefit.
If one fails to deposit the minimum amount in any financial year to a PPF account, the account will get deactivated. One can get it reactivated by paying Rs. 50 penalty and Rs. 500 as the inactive year’s contribution.
No, NRIs are not eligible to open a PPF account. However, if the account was opened before the account holder became NRI, the account has to be maintained till maturity. After maturity, the available amount has to be withdrawn, and the account cannot be extended.
You can make partial withdrawal of up to 50% of the amount available in your PPF account after the completion of the 4th financial year. However, you can only withdraw this amount at the beginning of the 7th financial year.
The maturity period of PPF account is 15 years. However, upon maturing, you can extend your account over blocks of 5 years. There’s no limitation to extension of PPF.
You can continue PPF after 15 years with or without fresh contributions over a single or multiple blocks of 5 years.
You can close your PPF account only after the completion of 5 years from the time the account was opened. However, PPF premature closure is only applicable at the time of:
1. Death of the account holder
2. To pursue higher education
3. For medical emergencies pertaining to self, spouse, dependent children or parents
However, you need to submit relevant documents to support your request.
PPF is a scheme dedicated to Indian residents; NRIs are not allowed to invest in PPF. However, anyone who had invested in a PPF account before becoming an NRI, the account will remain active till maturity.
Form C is used for claiming your PPF proceeds. You need to submit Form C in case you want to make partial withdrawal or complete withdrawal of your PPF earnings upon maturity.
