|Type of Withdrawal||Time Period||On what grounds||How much?|
|On Maturity||After 15 years||Any||Full Amount|
|Partial Withdrawal||After 5 years||Any||50% of balance|
|Premature Closure||After 5 years||Medical, Education||Full Amount|
You can withdraw from the PPF account after it matures 15 years from account opening. You can also make partial withdrawals, after 5 financial years from account opening. Finally you can go for premature closure after 5 financial years, on specific medical and educational grounds. For more details on the overall PPF account, click here.
PPF Withdrawal on Maturity
The PPF Account matures after a term of 15 years. On maturity you can withdraw the entire corpus.
PPF Withdrawal on Extension
On maturity, you can extend the term of the account for as long as you wish, in blocks of 5 years. If you do not withdraw your money from the account and close it, the account is extended by default. The account continues to earn interest on extension, on its accumulated balance.
Withdrawal after simple extension
After you have extended the account for a block of five years, you can only withdraw an amount up to the balance in the account at the time of extension. In addition, only one withdrawal can be made per year. For instance, assume that your account was opened in 2000. It had accumulated Rs 20 lakh and you extended it in 2015 to 2020. You can only make a withdrawal up to Rs 20 lakh in 2022. Second, you can only make one withdrawal in that year.
Extension with contributions
You can also extend the account ‘with contribution.’This allows you to keep contributing fresh money to the PPF account and get interest on it along with interest on your existing money. However this is only possible if you have submitted Form H to extend the PPF account, within one year of the original maturity of the account.
If you fail to submit Form H, you cannot contribute further amounts to the PPF account. Any such contributions will be treated as irregular and will neither earn interest nor get tax deduction under Section 80C.
Withdrawal after extension with contributions
After extension of the account with contributions, you can only withdraw 60% of the balance accumulated at the time of extension over the fresh 5 year period. In addition, you can only make one withdrawal per year. For instance, assume that your account was opened in 2000. It had accumulated Rs 20 lakh and you extended it in 2015 to 2020, with contributions. You can only make a withdrawal up to Rs 12 lakh in 2022. Second, you can only make one withdrawal in that year.
Partial/Premature PF Withdrawal
- Partial withdrawals can be made from the 5th financial year after the account is opened. For instance, if the account was opened on Jan 1, 2012 a withdrawal can be made from financial year 2017-18 onwards.
- There is no tax on partial/premature withdrawals from the PPF account
- Only one partial withdrawal is allowed per financial year. The maximum amount that can be withdrawn per financial year is the lower of following :
- 50% of the account balance as at the end of the financial year, preceding the current year, or
- 50% of the account balance as at the end of the 4th financial year, preceding the current year.
In the above example, if partial withdrawal has to be made on April 1, 2017 the maximum amount that can be availed as loan would be lower of :
- 50% of the balance as on March 31, 2017 (current financial year is 2017 – 2018 hence financial year immediately preceding the current financial year is 2016 – 2017 which ends on March 31, 2017)
- 50% of the balance as on March 31, 2014 (current financial year is 2017 – 2018 hence 4th financial year immediately preceding the current financial year is 2013 – 2014 which ends on March 31, 2014)
Form C is required to be submitted to withdraw partial amount from the PPF account. Details such as account number, amount of money to be withdrawn, etc. is to me mentioned on the form. In case, the account is in the name of the minor, there should be an additional declaration stating that the amount is required for the use of minor child who is still a minor and is alive.
Premature closure of the PPF account is allowed only 5 financial years, after the account is opened. It is only allowed on three grounds :
- Life-threatening ailment or serious diseases faced by account holder/spouse/children
- Children’s higher education: Documents confirming admission in a higher education institution of the account holder’s child have to be produced
A penalty of is levied in the form of a 1% reduction in the interest applicable for the period for which the account is held. For example if you have earned interest of 8% per annum for five years on the PPF account, the interest for each year will be reduced to 7%.
PPF Partial Withdrawal Process
- You need to fill up Form C. You can also get a hard copy of this form from your local bank branch.
- Mention your PPF account number and the amount you wish to withdraw.
- Mention how many financial years have been completed since the opening of the PPF account.
- If the account holder is a minor (you have opened it for your child) you have to certify that the account holder is alive and is a minor in the form.
- You have to enclose the PPF passbook.
- The bank/post office branch concerned will check your date of account opening, account balance, date of last withdrawal and amount of money that is allowed to be withdrawn by the PPF rules and fill up the relevant section of the form.
- You can get the amount credited to your savings account or get a demand draft (DD) for the same. You need to mention this on the form, affix a revenue stamp on the same and sign it.
PPF Withdrawal Form
You can make a partial withdrawal from the PPF using Form C. You also have to submit your passbook at the time of submission and affix a revenue stamp to the form. The form has two sections that you have to fill out – basic details and acknowledgement. We have used the SBI form as an example, but the form is the same throughout banks and post offices. The two sections are as follows :
PPF Withdrawal for NRIs
NRIs cannot open PPF accounts. However accounts opened by NRIs before they became NRIs can be continued till maturity. On maturity, NRIs have to withdraw the entire PPF account and close the account. They cannot extend the PPF account
Taxability of PPF Withdrawals
PPF withdrawal is fully exempt from tax. This applies to both withdrawal on maturity and partial withdrawal before maturity.
PPF Premature Termination
- Treatment of serious ailments or life threatening diseases of the account holder, spouse or dependent children or parents
- Higher education of the account holder or the minor account holder.