PPF Withdrawal Rules & Process Last Updated : 21 Sep 2019

PPF Withdrawal Rules & Process
PPF Withdrawal Rules & Process

There are very strict rules and procedures regarding the withdrawal of your PPF amount. It is important to know about this withdrawal process, taxability, premature withdrawal, loan facility, etc., before you withdraw it.

The Public Provident Fund (PPF) scheme comes with a lock-in period of 15 years. Contributions made towards the account along with the interest that has been generated can be withdrawn only after the completion of the duration of the scheme. However, under certain circumstances, you can opt for a partial withdrawal or close the account prematurely.

For more information, Check out related articles PPF Account, PPF Interest Rate, PPF Calculator & PPF Online Payment

Given below are the types of withdrawal that are allowed under a PPF account:

Type of withdrawal Duration Grounds Amount that can be withdrawn
After maturity After 15 years No criteria The full amount along with the interest that has been generated
Premature closure After 5 years For education or medical treatment The full amount
Partial withdrawal After 15 years No criteria Up to 50% of the balance that is available

Rules of PPF

The PPF calculation for a contribution of Rs.1,50,000 per annum is mentioned in the table below:

Financial Year Opening Balance (Rs.) Deposit (Rs.) Rate of Interest p.a. (%) Closing Balance (Rs.)
2014-2015 0 1,50,000 8.70 1,63,050
2015-2016 1,63,050 1,50,000 8.70 3,40,285
2016-2017 3,40,285 1,50,000 8.10 5,29,998
2017-2018 5,29,998 1,50,000 7.80 7,33,037
2018-2019 7,33,037 1,50,000 7.80 9,51,913

Therefore, for the financial year 2019-2020, individuals are eligible for a loan amount of up to 25% of closing balance that is available for the financial year 2018-2019. Therefore, individuals can avail a loan amount of Rs.2,37,978.

PPF Withdrawal
PPF Withdrawal

Partial Withdrawal of PPF

Under the PPF scheme, you are eligible to partially withdraw a certain amount of money. However, in case you wish to opt for a partial PPF withdrawal, the below-mentioned points must be noted:

  • Partial withdrawal facility is available after the completion of 5 financial years from the date the PPF account was opened.
  • You can withdraw up to 50% of the balance that is available after the completion of the fourth financial year.
  • Only one partial withdrawal is allowed in a financial year.
  • Individuals must submit the passbook along with the application form.
  • Only after the bank or post office verifies all details will partial withdrawal be allowed.
  • The amount that is withdrawn is tax-exempt.

PPF complete withdrawal

As per the PPF rules, you can withdraw the PPF amount after the completion of the lock-in period of 15 years. Once the 15 years PPF lock-in period is completed, you can close the account by withdrawing the entire contribution made towards the account along with the interest that has been generated.

Withdrawal of PPF amount due to an automatic extension

After the completion of 15 years, you will be able to extend the PPF account by 1 or more blocks. Each block consists of a period of 5 years. In case you do not withdraw the PPF amount or close the account, it will get automatically extended. However, interest will be generated on the total amount that has been accumulated in the account.

Withdrawal of PPF amount after a simple extension

After the extension of the PPF account, you will be able to withdraw the amount that was available in the account at the time of maturity. You will also be able to make only one withdrawal in a financial year.

Extension of PPF account by making contributions

Under the PPF scheme, you are allowed to extend the PPF account with contributions. By extending the PPF account, you are allowed to make contributions and interest will be generated on the contributions made towards the account as well.

However, you will have to submit the application form (Form H) at least 1 year before the maturity of the account in order to extend the account with contributions. In case you do not submit Form H, no further contributions can be made. In case you do make contributions, the account will be considered as irregular and no tax benefits can be availed under Section 80C of the Income Tax Act.

Withdrawal of PPF amount after extension with contributions

Once you have extended the account and started making contributions, up to 60% of the balance that was accumulated at the time of extending the account can be withdrawn. However, only one withdrawal is allowed in a financial year.

Premature closure of PPF Account

You will be able to opt for premature closure only after the completion of 5 financial years. However, premature closure is allowed only under the below-mentioned grounds:

  • In case the account holder, his/her spouse, or children are suffering from a serious disease or require treatment for a life-threatening ailment.
  • Premature closure is also allowed to pay for a child’s higher education. However, documents that confirm the admission of the child at the university or college must be submitted.

However, a 1% penalty is levied from the actual rate of interest that was given by the account. For example, if the individual was earning an interest of 8.5% on the contributions that are being made, in case he/she closes the PPF account prematurely, the rate of interest will be reduced to 7.5%.

Given below is the table for the calculation of the amount in case of premature closure of the account:

Financial Year Opening balance (Rs.) Deposit (Rs.) Rate of interest p.a. (%) 1% lesser rate of interest (%) Closing balance (Rs.)
2011-2012 0 1,00,000 8.60 7.60 1,07,600
2012-2013 1,07,600 1,00,000 8.80 7.80 2,23,793
2013-2014 2,23,793 1,00,000 8.70 7.70 3,48,725
2014-2015 3,48,725 1,00,000 8.70 7.70 4,83,276
2015-2016 4,83,276 1,00,000 8.70 7.70 6,28,188
2016-2017 6,28,188 1,00,000 8.10 7.10 7,79,889
2017-2018 7,79,889 1,00,000 7.80 6.80 9,39,721
2018-2019 9,39,721 1,00,000 7.80 6.80 11,10,422

Given below is the table with the account balance in case individuals do not close the account prematurely:

Financial Year Opening balance (Rs.) Deposit (Rs.) Rate of interest p.a. (%) Closing balance (Rs.)
2011-2012 0 1,00,000 8.60 1,08,600
2012-2013 1,08,600 1,00,000 8.80 2,26,957
2013-2014 2,26,957 1,00,000 8.70 3,55,402
2014-2015 3,55,402 1,00,000 8.70 4,95,021
2015-2016 4,95,021 1,00,000 8.70 6,46,787
2016-2017 6,46,787 1,00,000 8.10 8,07,276
2017-2018 8,07,276 1,00,000 7.80 9,78,043
2018-2019 9,78,043 1,00,000 7.80 11,62,130

Process to withdraw the PPF amount

In case you wish to withdraw the PPF amount completely or partially, you must submit Form C at the relevant bank or PPF post office. Given below are the three sections that are present in Form C :

  • Declaration section: Under this section, you will need to give details of the PPF account number and the reason for the withdrawal of the PPF amount. You will also need to give details about the number of years the account has been open.
  • The office use section: Under this section, the below details are present:
    • Date and the signature of the person who is in charge.
    • The total amount of money that can be withdrawn.
    • Total amount of money that is available in the account.
    • Date by which the previously requested withdrawal was allowed.
    • Total balance that is available in the PPF account.
    • The date when the account was opened.
  • Bank details section: Under this section, the details of the bank where the amount must be credited to needs to be filled. Details of the cheque or demand draft that is being issued can also be filled in this section.
  • In case the account holder is a minor, he/she must be alive, and details of the minor must be submitted.
  • The bank or office will do a thorough verification before processing the withdrawal request.

Withdrawals by Non-resident Indians (NRIs)

NRIs are not allowed to open a PPF account. However, in case the account was opened before they became NRIs, it will have to be continued until maturity. After maturity, the amount available in the account must be withdrawn and the account will have to be closed. PPF account for NRIs are not allowed to extend.

PPF Tax benefits

Under Section 80C of the Income Tax Act, tax benefits are provided for withdrawals made from a PPF account. PPF Tax benefits are provided for complete and partial withdrawals.

FAQ's

  1. When Can Partial Withdrawals Begin?
  2. 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).
  3. How Many Partial Withdrawals are Allowed Per Financial Year, Starting From The 7Th Financial Year after The PPF Account Creation?
  4. 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.

  5. How Much of an Amount can be Withdrawn Once a Year, Starting From The 7Th Financial Year After PPF Account Creation?
  6. The amount that can be withdrawn is equal to the lower of:

    50% of the PPF 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).

  7. What is the PPF Maturity Duration?
  8. The PPF account attains maturity in 15 years from the date on which it was created.

  9. Is it Possible to Prematurely Close PPF Account?
  10. No, a PPF account cannot be prematurely closed for any reason except the death of the account holder.

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