The Public Provident Fund (PPF) is a popular long-term investment scheme in India known for its appealing interest rates and tax advantages. Understanding PPF withdrawal rules is important to maximise your account benefits.
Whether you are planning for a major financial milestone or simply looking to access your savings, knowing when and how you can withdraw from your PPF account is essential to make informed decisions.
Rules of PPF withdrawal
PPF withdrawal rules are designed to ensure that the fund serves its purpose of long-term savings.
- Maturity period: A PPF account matures in 15 years.
- Partial withdrawals: Allowed from the 7th year
- Extension: After maturity, the account can be extended every fifth year, with or without further contributions
- Premature closure: Permissible under specific conditions, such as:
(a) Treatment of life threatening disease of the account holder, spouse or dependent children or parents, subject to producing of supporting documents and medical reports confirming such disease from treating medical authority.
(b) Higher education of the account holder, or dependent children on producing of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad
(c) On change in residency status of the account holder on production of copy of Passport and visa or Income-tax return
PPF withdrawal on maturity
After 15 years, you can withdraw your entire PPF balance, which is completely tax-free, making it ideal for long-term savings. The 15-year period starts from the end of the financial year when the first contribution was made.
For instance, if you contributed on 10 September 2012, your account will mature on 1 April 2028.
PPF extension on maturity
If you prefer to continue growing your savings, you can extend your PPF account in five-year blocks. You have two options:
1. PPF extension without contributions
If you choose not to contribute further, your account will continue to earn interest on the existing balance. Withdrawals during this period are allowed once a financial year.
2. PPF extension with contributions
Extending your PPF account with additional contributions allows you to continue growing your savings. You can extend your PPF account by making additional contributions within one year of its original maturity date using Form H. Failure to submit Form H will result in ineligibility for further contributions, with deposited amounts not earning interest or tax benefits under Section 80C of the Income Tax Act, 1961.
PPF withdrawal rules after extension
1. Without contribution
If you extend your PPF account without making further contributions, you have the flexibility to withdraw any amount from your account. However, you are limited to one withdrawal per financial year.
2. With contribution
During each 5-year extension period, you can withdraw up to 60% of the balance at the beginning of the period. For example, if your extended PPF account has ₹20 lakh, you can withdraw up to ₹12 lakh (60% of the balance) either in a single transaction or multiple instalments.
PPF partial withdrawal process
For a partial withdrawal from your PPF account:
Step 1: Obtain Form C
- By visiting the nearest Axis Bank Branch
- Fill out the three sections:
- Declaration: PPF account number, withdrawal amount, and account active years, date and Signature
- Office-use: Sanctioned amount, Date of withdrawal sanction, Branch Stamp
Step 2: Attach documents
- Enclose a copy of your PPF passbook with Form C.
Step 3: Submit your application
- Submit the form and passbook copy at your bank branch.
- Specify if you want the amount credited to your Savings Account or via DD.
- Affix a revenue stamp on the form and sign it.
Premature closure of PPF account
Premature closure of a PPF account is restricted but possible after five years from opening the account:
- Treatment of life-threatening diseases of the account holder, spouse, dependent children, or parent on producing of supporting documents and medical reports confirming such disease from treating medical authority
- Higher education of the account holder or dependent children on producing of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad
- A change in the residency status of the account holder on producing of copy of Passport and visa or Income-tax return
A penalty of 1% interest reduction on the interest earned will be imposed on premature closure.
How much can you withdraw from the PPF account before maturity?
Before maturity, partial withdrawals are allowed from the seventh financial year, with the maximum amount being the lesser of 50% of the balance from the fourth financial year before the application year or 50% of the balance from the preceding year. For instance, if you request a PPF withdrawal in October 2029, you will receive 50% of the corpus balance at the end of FY29 or FY26, whichever is lower.
Also Read : Tips to earn maximum interest on PPF
FAQs
What is the maturity period of the PPF account?
The maturity period is 15 years from the end of the financial year when the account was opened.
Can we continue PPF after 15 years?
Yes, you can extend your PPF account in five-year blocks, with or without contributions.
What is PPF withdrawal form?
Form C is required to process partial withdrawals.
What is the PPF withdrawal process for NRIs?
NRIs cannot open new PPF accounts but can maintain existing accounts until maturity. Upon maturity, NRIs must close their PPF accounts and cannot extend them.
Can we close the PPF account before the maturity period?
Yes, premature closure is allowed after five years since the date of opening one, subject to specific conditions and a 1% interest penalty.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
