Can I withdraw from my PPF account before 15 years?

4 MinsJan 18, 2021

Saving for retirement is a critical financial need, but unfortunately, it often gets overlooked. To help investors save for their retirement, the government offers Public Provident Fund as a long-term saving instrument.

ppf account

PPF scores over other tax-saving instruments because it falls in the Exempt-Exempt-Exempt (EEE) category. This means that investments into PPF, the returns earned on them, and the corpus withdrawn at maturity are all exempt from taxes. In the case of most other tax-saving options, you would have to pay tax at least once during these three stages.

But this does not mean that you have to wait for 15 years to withdraw from your PPF account. Let us take the example of 45-year old Girish Lad. Girish opened his PPF account 10 years ago. He now wants to build a house on his ancestral land and is considering making a partial withdrawal from his PPF fund. Let us see how he can withdraw and how much. 

Girish need not wait for five more years to access his PPF funds

Girish can avail the partial withdrawal option offered by PPF account. Under this option, investors can make a partial withdrawal from their PPF accounts five years after they have opened their account. However, the withdrawal amount is capped at 50% of the total funds in the account at the end of the fourth year from its opening.

This means that if his corpus at the end of the fourth year stood at, say, Rs. 4 lakh, Girish can make a partial withdrawal of Rs. 2 lakh. The partial withdrawal is also tax-free. 

[Also Read: Here’s How to Open a PPF Account]

If Girish has finished the 15 years of lock-in, he can withdraw funds whenever he pleases

At the end of the 15-year lock-in, Girish has three options. 

(1) He can make a complete withdrawal and close his account.

(2) He can opt for continuing his account without additional contributions. In such a situation, the corpus he has accumulated will continue earning returns. During this extension period, he can withdraw any amount, once a year.

(3) He can opt to extend his account and continue to make contributions. Such extensions come in five-year blocks, meaning he will have to continue making contributions for that period. In this option, he can make a partial withdrawal once a year, and the total withdrawal is capped at 60% of the corpus at the beginning of the extension period. 

Girish can also close his PPF account before the expiration of the lock-in 

Premature closures are allowed only after five years of opening the account and only for specific reasons. These conditions are life-threatening diseases (for the account holder or spouse, parents or dependent children), higher education of kids, or residential status change. In each of these situations, Girish will have to submit documents to support his claim.

What’s the process for a partial withdrawal?

The process for a full or partial withdrawal is reasonably straightforward. Investors who want to withdraw have to submit a Form C at the respective bank branch linked with their PPF account with all the relevant details.

Tax benefits of PPF

You can claim a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act on your PPF accounts. The current applicable rate for PPF investments is 7.1% (from October 1, 2020). It was 7.9% from August 2019 to September 2020.

You have to make at least one deposit every year for 15 years into your PPF accounts. The minimum deposit size is Rs 500 for one year, and the maximum is Rs 1.5 lakh. 

Open PPF online

Axis Bank is one of the government authorised banks to offer PPF account services. You can also invest online by linking your Axis Bank savings account with the PPF account. You can also view the balance as well as print statements. In case you want to withdraw some funds from your PPF account prematurely, speak to your Relationship Manager who will help you with the process.

To know more about PPF accounts with Axis Bank, visit us.

Disclaimer: The Source, a Mumbai-based content creation and curation firm, has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source 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.