PPF Withdrawal Rules – How To Get The PPF Amount Before And On Maturity
PPF or Public Provident Fund is a risk-free long-term Government investment scheme with an annual interest rate of 7.1% p.a. Launched in 1968 by the National Savings Institute under the Ministry of Finance, this scheme helps create a retirement corpus for investors. However, it comes with a lock-in period of 15 years. Does that mean you cannot withdraw the PPF amount in case of an emergency? You can, but you must adhere to Government rules and guidelines. This post lists all the PPF withdrawal rules in various situations. Read on!
PPF Withdrawal Rules
The table given below will explain the different rules of PPF withdrawal along with their duration, reason and amount.
| Withdrawal Rule or Type | Duration (years) | Reason for Withdrawal | Amount |
| Post maturity | 15 | None | Whole amount, along with the interest |
| Partial withdrawal | 6 | None | 50% of the available amount |
| Premature closure | 5 | Educational or medical | Whole amount |
Partial Withdrawal from PPF Account before Maturity
Partial withdrawal from PPF can be made after completion of the 6th financial year from the date the account was active. You can only make one partial withdrawal per financial year, and also, there is no tax calculation on a partial withdrawal. You can withdraw 50% of the amount available after verification of the application form and passbook.
PPF Withdrawal on 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, and after successful verification, the amount will be transferred to your bank account.
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Premature Closure of PPF Account
Individuals can only apply for premature closure of a PPF account after the 5th financial year. As a result of premature closure, they will receive 1% less than the current interest rate. They can close the account prematurely only in the case of the following conditions:
- For dealing with critical medical emergencies of spouse, parents or children
- To meet higher study requirements of their own children
- In case of change in residential profile
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 |
Loan from PPF Account
There were some changes made to PPF loan rules in 2021. Earlier you could take out a loan from your PPF account from the third financial year and pay a 2% interest on the PPF rate. In 2021, the rate of interest was reduced to 1%. You can now avail a loan amount accounting for up to 25% of the available balance at the end of two preceding years from which you apply for a loan. In certain unfortunate circumstances, like the demise of the account holder, the legal heir will have to pay interest on the unpaid loan amount, if any.
PPF Withdrawal Extension
After completion of the 15 years tenure, if you wish, you can extend your PPF account for another five years. Now there are two instances which are explained below for withdrawal.
1. Without contribution
Suppose you have extended your PPF account without any further contribution for another 5 years. In that case, you can only withdraw the amount accumulated at the time of extension and only once a financial year. For example, let’s say you opened a PPF account in 2005, and the amount at the end of tenure is Rs. 25 lakh. You can choose to extend the account till 2025 without any contribution. As a result, you can withdraw a maximum of Rs. 25 lakh only once a year.
2. With contribution
In case of extension of PPF account for another 5 years with contribution, you can make a withdrawal of 60% of the available balance accumulated at the time of extension only once a year over the next 5 years. For example, let’s say you have a PPF account with Rs. 20 lakh at the time of extension in 2020. You can only withdraw Rs. 12 lakh during the tenure of 5 years extension. Furthermore, you can withdraw only once in a financial year.
PPF Calculation
For a clear understanding of PPF, here is a table showing the calculation for a contribution of Rs. 50,000.
| Financial Year | Opening Balance (Rs) | Deposit Amount (Rs) | Interest Rate (%) | Closing Balance(Rs)(approx.) |
| 2017-18 | 0 | 50,000 | 7.80 | 53,900 |
| 2018-19 | 53,900 | 50,000 | 7.80 | 1,12,004 |
| 2019-20 | 1,12,004 | 50,000 | 8 | 1,74,964 |
| 2020-21 | 1,74,964 | 50,000 | 7.10 | 2,40,936 |
Procedure for PPF Withdrawal
If you wish to withdraw your PPF account balance partially, prematurely, or on maturity, you have to submit Form C at the bank or post office. The whole procedure is divided into three sections:
- Declaration
This is the first step where you have to give the details of your PPF account along with the grounds for withdrawal and the number of years the account has been active for. - Office use
In this section, the following details have to be presented:- Date and signature of the person in charge
- Available balance in the PPF account
- Opening date of the account
- Amount of money that can be withdrawn
- Earlier requested withdrawal date, if any
- Bank details
This is the final section where you have to provide details of the bank account linked with your PPF account. After thorough verification of the details provided, the transfer will be made to your bank account.
PPF Tax Benefits
The following are the tax benefits associated with PPF:
- The principal amount, interest, and maturity amount are exempt from taxes.
- PPF is enlisted under the EEE category of tax implications
- The maximum investment amount is 1.50 lakh, and it is fully exempted from taxes under conditions that the account holder is not involved in any other investment scheme under Section 80C.
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Final Word
PPF is a safe long-term savings scheme by the Government of India. The high-interest rate and tax benefits are also added benefits. However, the 15-year lock-in period may not be favorable in all situations. If you wish to withdraw the amount before maturity, you must follow the PPF withdrawal rules. After maturity too, follow the rules to claim the amount. It is best to carefully review the PPF withdrawal rules, terms and conditions before investing in PPF.
FAQs
Ans: Form C is the PPF withdrawal form used for partial withdrawal or withdrawal on maturity. This form has two sections — basic details and acknowledgement.
Ans: 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.
Ans: 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.
Ans: 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.
Ans: 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.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
