PPF is one of the most popular government-backed savings schemes in India because of its guaranteed returns and tax benefits. PPF has a maturity period of 15 years after which you can choose to withdraw funds from your PPF account. Partial withdrawals are also allowed before the account matures (after the 6th financial year from account opening) but only under certain circumstances. Here is all you need to know about PPF withdrawals- partial and complete, premature closure and extension of your PPF account after maturity.
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|Type of PPF Withdrawal||Time Period||On what grounds||How much?|
|On Maturity||After 15 years||Any||Full Amount|
|Partial Withdrawal||After 6 years||Any||50% of the balance|
|Premature Closure||After 5 years||Medical, Education||Full Amount|
PPF Withdrawal on Maturity
As mentioned above, the PPF account matures after a term of 15 years. On maturity, you can withdraw the entire corpus. For this, you will have to submit a duly filled Form C at the bank branch or post office where you have your PPF account. The PPF will be terminated thereafter and the corpus will be credited to your bank account.
PPF Extension on Maturity
After your PPF account matures, you have the option to either withdraw the entire corpus or 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.
You can choose to extend your PPF account with or without contributions.
PPF Extension without Contributions: This means, after maturity, you keep your PPF account active but do not make any further deposits. Your overall corpus will keep earning interest until you withdraw the entire amount.
PPF Extension with Contributions: After your PPF account reaches maturity, you can keep it active and continue making contributions to it. 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.
Note: If you continue your PPF account without deposits for more than one year after maturity, you will not have the option of making further contributions to it.
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PPF Withdrawal Rules after Extension
PPF Withdrawal after Extension without Contribution
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 an extension. Also, only one withdrawal can be made per year. For instance, assume that your account was opened in the year 2000. It had accumulated Rs 20 lakh and you extended it from 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.
PPF Withdrawal after Extension with Contribution
After the 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. Also, you can only make one withdrawal per year. For instance, assume that your account was opened in the year 2000. It had accumulated Rs 20 lakh and you extended it from 2015 to 2020, with contributions. You can only make a withdrawal up to Rs 12 lakh in the year 2022. Second, you can only make one withdrawal in that year.
Partial/Premature PPF Withdrawal
Following are the important rules related to withdrawal from your PPF account before maturity:
- Partial withdrawals from PPF can be made from the 6th financial year after the account is opened. For instance, if the account was opened on Feb 1, 2020, a withdrawal can be made from the financial year 2025-26 onwards.
- There is no tax on partial/premature withdrawals from the PPF account
- Only one partial withdrawal is allowed per financial year.
How Much Can you Withdraw From your PPF Account Before Maturity?
The maximum amount that can be withdrawn per financial year is the lower of the 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 the partial withdrawal has to be made on April 1, 2017, the maximum amount that can be availed as the loan would be lower of:
- 50% of the balance as on March 31, 2017 (the 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 (the 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 the partial amount from the PPF account. Details such as account number, amount of money to be withdrawn, etc. are to be mentioned in 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.
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PPF Partial Withdrawal Process
If you are eligible for withdrawal of PPF, you can partially withdraw your balance. Here are the steps of withdrawing money from your PPF account:
Step 1: Download the PPF Withdrawal Form (Form C) from your bank’s website online or you can get it from the bank branch. There are three sections of the PPF withdrawal form-
- Declaration section: Here you have to provide your PPF account number and the amount of money, which you wish to withdraw. Besides that, you need to specify for how many years the account has been active
- Office-use section: Here, you need to fill the details like date of account opening, current total balance, date of previous withdrawal (if any), total withdrawal made from the account, etc.
- Bank details section: Bank account number and other required details of the account in which the withdrawn amount should be credited
Step 2: Enclose a copy of PPF passbook along with Form C.
Step 3: Submit the same at your respective bank branch
Your application will be processed and the withdrawal amount will be sanctioned at the earliest. 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.
Premature Closure of PPF Account
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 or account holder’s higher education: Documents confirming admission in a higher education institution have to be produced
- Change in resident status of account holder (becoming an NRI)
A penalty 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%.
Tax Benefits on PPF
- PPF withdrawal is fully exempt from tax. This applies to both withdrawal on maturity and partial withdrawal before maturity
- PPF is listed under the EEE (Exempt-Exempt-Exempt) category of tax implications
- Investments up to Rs.1.5 lakh are exempt from taxes under Section 80C of the Income Tax Act
- The principal amount invested, the interest earned, and the maturity amount are exempt from taxes
- Since the maximum contribution to PPF in one financial year is Rs.1.5 lakh, the entire amount is tax-deductible provided that the account holder has not made any other investments under Section 80C
What is the maturity period of the PPF account?
Public Provident Fund accounts have a maturity period of 15 years. However, the PPF account can be extended in the blocks of 5 years after the original maturity is reached.
Can we continue PPF after 15 years?
Yes, you may continue to invest for a maximum of 5 years in PPF, after the maturity period of 15 years is reached. For that, you will have to apply for a PPF extension either with or without contributions.
What is 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 acknowledgment.
When can we withdraw the PPF amount?
PPF is a long-term investment scheme with a working tenure of 15 years. Account-holders are eligible to make partial premature withdrawals from their PPF accounts after the completion of 5 financial years from the date on which the account was opened, but only under certain circumstances.
Can we close the PPF account before the maturity period?
Yes, a PPF account can be closed before the maturity period ends but only under certain circumstances. Premature closure of a PPF account is possible only when 5 years have elapsed (after continuous contributions) since the date on which the account was opened. The premature closure of the PPF account will be considered only under these circumstances-
- In case of a life-threatening disease afflicted upon the account-holder, his/her spouse, or dependent child
- In case of fund requirement for the higher education of the account holder or his/her children
- In case of a change in the residency status
Can I withdraw money from my PPF account before maturity? What is the Process?
Yes, you can withdraw money from your PPF account if you have completed 5 years of continuous contributions. For that, you need to obtain Form-C (PPF Withdrawal Form) from your respective bank, fill it and submit the same along with an application for withdrawal at the bank.
What is the PPF withdrawal process 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.