Take a look at the table given below to understand how you can withdraw your Public Provident Fund (PPF) scheme partially or fully:
|Withdrawal type||When PPF scheme matures||For withdrawing partially||For premature closure of scheme|
|Period||Post 15 years||Post 5 years||Post 5 years|
|Reason for withdrawal||Any reason||Any reason||Educational or medical needs|
|Amount that can be withdrawn||Complete amount||50% of your PPF balance||Complete amount|
PPF Withdrawal Process for Non-Resident Indians (NRIs)
As per the rules, NRIs are not permitted to open a PPF account. However, if you had created a PPF account before you became an NRI, you can still keep your account until it matures. Once the scheme matures, as an NRI, you will be required to withdraw the full PPF account and close the account as you are not allowed to extend your account after this period. The Government of India has been working towards bringing some amendments with regard to PPF schemes offered to NRIs.
PPF schemes are essentially schemes that are provided for 15 years and then they can be prolonged for an additional years over intervals.
Taxability of Withdrawals of PPFs
A PPF is a great savings instrument that is tax-friendly. Whenever you invest money in a PPF scheme, you can enjoy a tax deduction under Section 80C of the Income Tax Act. This is because PPFs come under the EEE (Exempt Investment, Exempt Return, Exempt Maturity or Withdrawal) category. This means that you need not pay tax whether you invest in PPF, earn from PPF, or withdraw from PPF. Moreover, the amount that you receive when the scheme matures and the interest that you get on your scheme are fully tax exempt.
Tax Treatment of Partial Withdrawals of PPFs
You can withdraw money from your PPF account partially on a yearly basis only after you complete the 7th financial year after you open your PPF account. You can make partial withdrawals even after you extend your account once it matures after a period of 15 years. Under Section 10 (11) of the Income Tax Act, any payment that you make from a PPF is exempt from taxes.
Thus, PPFs are tax-friendly instruments, wherein you do not have to pay any tax on the principal sum when an account is closed prematurely or on the interest earned through a PPF.
Key points to know about PPF Accounts
Public Provident Fund is a government initiated long term investment scheme which accumulates regular interests on the deposited amount. The rate of interest payments in PPF are comparatively higher than other fixed and recurring deposit schemes of banks. PPF investments range from Rs.500 to Rs.1,50,000 and it comes with a lot of benefits including tax exemption. The scheme allows for partial withdrawals in times of emergency but the option of complete withdrawal is available only after 15 years from the date of enrollment.
- PPF account allows one to make complete withdrawals only after the policy attains maturity i.e., at the end of the 15th year.
- The PPF interest rates are notified by the government from time to time and for the fiscal year 2016 it is 8.7% per annum.
- Partial withdrawals are allowed only after completion of five years from the date of initial subscription.
- The maximum amount that one can deposit in a PPF account is Rs.1.5 lakhs.
How to check your PPF Account Balance
If you have enabled net banking, then you can check your PPF Balance in a few quick steps. Just login to the bank’s website using your credentials and under the PPF section click on balance information. It will list out all the details pertaining to deposits made, interests accrued, and the current PPF balance. Some banks also provide the option of linking your PPF account to a different savings bank account. But generally, PPF accounts and savings accounts are maintained by the same bank. Apart from checking your PPF balance, the banking portal allows you to transfer funds online. The online facility also allows you to give standing orders so that a fixed amount will be deposited to your PPF account on a regular basis.
So if you haven’t received the internet banking kit from your bank yet, apply soon as it will help you save a lot of time on paperwork. With internet banking, you need not visit the bank each time you wish to check your PPF account details. Except for the changes in user interface and layout, the procedure to check PPF balance remains same for most of the banks,. However, if you maintain your PPF account with a post office, you may not be able to check your balance online for all the branches. In such cases, visit the respective post office branch with your passbook and request for PPF account details. It is to be noted that not all post office branches have the PPF facility.
Rules of PPF Withdrawal
A PPF account matures after completion of 15 years. However, in case of emergencies, certain sums of money are permitted to be withdrawn within 15 years. Such withdrawals are restricted by certain rules.
- Withdrawals from the PPF account are permitted only after completion of 7 years from the day of creation of the PPF account. The withdrawal can be made at the start of the financial year.
- The amount of money that can be withdrawn is restricted to a certain amount.
- Only 50% of the closing balance at the end of the 4th year prior to the year when the money is being withdrawn or 50% of the closing balance of the previous year, whichever is lower will be the limit.
- If a loan has been taken from the PPF account, the loan amount will be deducted from the amount that can be withdrawn.
- Only one withdrawal is allowed per financial year.
Knowing your PPF Withdrawal Status
Similar to checking your PPF account balance, you can have all the information related to withdrawals by simply accessing your bank account through internet banking. Checking the PPF claim status online is possible only in the banks which accept online deposits. For post office accounts, you will need to visit the branch in person and file a request to know your PPF withdrawal status.
PPF Accounts Features
Loan Facility for PPF Accounts
PPF loans are one of the best options to finance your short term requirements. If you compare personal loans offered by banks with that of PPF loans, the latter proves to be much beneficial in terms of interest rates. The interest rates on bank offered personal loans can be anywhere from 14% to 21%, whereas PPF loans are available at rates below 11% per annum. Given below are the key benefits of PPF loans:
- The rate of interest on loans is roughly 2% more than the interest offered on the deposits. The Ministry of Finance has set the interest rate on deposits for this financial year at 8.7% per annum.
- Similar to personal loans, the borrower does not have to pledge his assets for obtaining a PPF loan.
- PPF subscribers can apply for loans only between the 3rd and 5th financial year from the date of enrollment. But the loan facility will be discontinued from 7th year.
- The loan sanctioned will always be 25% of the PPF Balance in account at the end of the fiscal year that preceded the application year.
- The principal amount is to be repaid within 36 months, either as lump sum or as periodic installments.
- Only after repayment of the first loan can one apply for a second loan.
Premature Withdrawal of PPF
As already mentioned, PPF is one of the best methods to save on taxes and enjoy other long term benefits. The scheme allows partial withdrawal right after the completion of the 5th fiscal year. The PPF premature withdrawal will be useful at the times of financial emergencies such as medical treatments and higher education of children. As per the PPF withdrawal rules, the subscriber can withdraw only 50% of the accumulated amount by the 5th year of investment. But where the account holder has invested between 7 years and 12 years, the permissible limit on withdrawal is higher. Subscribers can apply for partial withdrawals using Form C through the bank where they maintain their PPF account. In the Declaration section of the form, the applicant will have to fill in information such as account number and the amount to be withdrawn. In addition to that, they should also specify the number of years completed from the date of initial subscription.
However, on completion of 15 years, subscribers are eligible for complete withdrawals. In case an account holder chooses to leave the amount non withdrawn, then he/she can extend the term for periods of 5 years each and avail the same interest rates and other benefits including tax exemption. It is to be noted that premature closure of the PPF account is possible only in case of death of the individual.
PPF withdrawal forms
|Form A||For PPF account opening|
|From B||Account deposit slip used for fund deposits or loan repayments|
|Form C||Form for partial withdrawal request|
|Form D||Form for PPF loan request|
|Form E||For adding PPF nominee|
|Form F||Change in nomination of the PPF account|
|Form G||Claim settlement form (in case of account holder’s death)|
|Form H||Form for extension of term period after maturity|
PPF Withdrawal from SBI
As discussed above, the PPF withdrawal rules are same for withdrawing from SBI or any other bank in India. SBI account holders can partially withdraw after completion of 5 years and the maximum withdrawal limit is 50% of the amount retained in the preceding year. But additionally, SBI offers a wide range of benefits including easy transfer of PPF account to any of its branches and online access.
List of Banks Providing PPF Facility
The following banks allow customers to open PPF accounts in India. However, it is to be noted that not all branches of these banks are authorized to do so. Therefore, kindly check the branch details of the bank you intend to open a PPF account.
- ICICI Bank
- HDFC Bank
- Axis Bank
- State Bank of India
- Allahabad Bank
- Andhra Bank
- Bank of India
- Bank of Maharashtra
- Bank of Baroda
- Central Bank of India
- Canara Bank
- Corporation Bank
- Dena Bank
- Indian Bank
- IDBI Bank
- Indian Overseas Bank
- Oriental Bank of Commerce
- Punjab National Bank
- Punjab and Sind Bank
- Union Bank of India
- UCO Bank
- United Bank of India
- Vijaya Bank
FAQs - Public Provident Fund(PPF) Withdrawal
1. When Can Partial Withdrawals Begin?
Partial withdrawals can be made, from the start of the 7th financial year after the account has been created
It is important to keep in mind that the timeframe taken into consideration is “financial year” which is from the 1st of April – to the 31st of March the next year.
For example, if Mr. A has created a PPF account in January 2010, he will only be able to withdraw from his account from the 1st of April 2015.
Mr. A’s PPF account was opened in January 2010, which means that it was opened in the financial year 2009 – 2010. The number of financial years, counted from when he opened the account will be as follows:
- Year 1: April 2009 – March 2010 (Account opened within this timeframe – in January 2010).
- Year 2: April 2010 – March 2011.
- Year 3: April 2011 – March 2012.
- Year 4: April 2012 – March 2013.
- Year 5: April 2013 – March 2014.
- Year 6: April 2014 – March 2015.
- Year 7: April 2015 – April 2016 (Mr. A can begin withdrawing from his PPF account from this date).
2. How Many Partial Withdrawals are Allowed Per Financial Year, Starting From The 7Th Financial Year after The PPF Account Creation?
Only one partial withdrawal will be allowed every financial year (starting from the 7th financial year onwards)
Considering the above example of Mr. A, he will only be able to withdraw from his PPF account once every year, starting from April 2015.
3. How Much of an Amount can be Withdrawn Once a Year, Starting From The 7Th Financial Year After PPF Account Creation?
The amount that can be withdrawn is equal to the lower of:
50% of the account balance as at the end of the year immediately preceding the current year, or,
50% of the account balance as at the end of the 4th year, immediately preceding the current year.
As in the above example with Mr. A:
Year 1: April 2009 – March 2010 (Account opened within this timeframe – in January 2010).
Year 2: April 2010 – March 2011.
Year 3: April 2011 – March 2012 (This is the 4thyear immediately preceeding the year in which withdrawals are possible, assuming Mr. A opted for withdrawal option as soon as he legally could. Mr. A can withdraw an amount equal to 50% of this amount if it is lower than that of “Year 6”).
Year 4: April 2012 – March 2013.
Year 5: April 2013 – March 2014.
Year 6: April 2014 – March 2015 (This is the year immediately preceding the year in which withdrawals are possible, assuming Mr. A opted for the withdrawal option as soon as he legally could. Mr. A can withdraw an amount equal to 50% of this amount, if it is lower than that of “Year 3”).
Year 7: April 2015 – April 2016 (Mr. A can begin withdrawing from his PPF account from this date).
4. What is the PPF Maturity Duration?
The PPF account attains maturity in 15 years from the date on which it was created.
5. Is it Possible to Prematurely Close PPF Account?
No, a PPF account cannot be prematurely closed for any reason except the death of the account holder.
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