PPF Withdrawal

PPF is a government-backed investment plan introduced with the intention to help individuals build a corpus that would come in handy after retirement.  With attractive interest rate and tax benefit up to Rs. 1.50 lakhs, this can be considered as one of the most lucrative and risk-free investments. The maximum investment period is 15 years and can be extended after maturity in blocks of 5 years. Also, the maturity proceeds, as well as the interest earned, are all tax-free. In view of this, the investment is termed as EEE, i.e., Exempt, Exempt, Exempt.

PPF Withdrawal Rules

The maximum investment period for PPF is 15 years. This risk-free investment is associated with stringent withdrawal rules. PPF withdrawal rules are different for withdrawal on maturity, partial withdrawal and premature withdrawal.

As per the PPF withdrawal rules, the amount along with accrued interest can be withdrawn only on completing 15 years from the date of opening the account. However, if the account holder has a financial crisis and needs funds before the completion of 15 years, then PPF partial withdrawal will be permitted on the completion of 6 years from the date of opening the account.

PPF withdrawal before maturity is also permitted in deserving cases up to 50% of the total balance in the holder's account at the end of the 4th financial year prior to the financial year when the amount is being withdrawn or 50% of the amount at the end of the financial year prior to the year when the amount is being withdrawn. Premature PPF withdrawal will be allowed only once in a financial year.

PPF Withdrawal on Maturity

As per the PPF withdrawal rules, the account holder is permitted PPf withdrawal on maturity, i.e., after completion of 15 years. There are a few steps to be followed for PPF withdrawal on maturity.

  • Fill in the relevant application, i.e., Form C, with the required details. You can either obtain Form C from the bank branch or can download the form online.
  • Submit the duly filled form at the bank branch where the PPF account is maintained.

The PPF withdrawal form, Form C, consists of 3 sections.

First Section: This is a declaration section wherein you will have to provide the details of the PPFaccount like account number, the number of years elapsed since the opening of the account and the amount you intend to withdraw.

Second Section: This section is for office use that consists of the following details.

  • PPF Account opening date
  • The total balance in the PPF Account
  • Date of previous withdrawal request
  • The amount available for withdrawal in the PPF account
  • The amount sanctioned for withdrawal.
  • Date of the transaction along with the signature of the concerned official

Third Section: This is the Bank Section wherein you will have to provide the details of the account to which the PPF withdrawal proceeds have to be credited.

PPF premature closure

In the normal course, as per PPF withdrawal rules, closure of the PPF account is not permitted before the completion of 15 years, i.e., before maturity. However, in exceptional cases like the ones explained below, premature closure of the PPF account is permitted. This premature closure can be done only after the completion of 5 years from the date of opening the account.

  • It is permitted in the event of hospitalisation of the account holder’s parents, spouse, minor children due to acute illness.
  • For the education expenses of the account holder’s children
  • If the resident status of the account holder changes

As per the PPF withdrawal rules, if the PPF account is closed prematurely, the interest rate will be reduced by 1%, and the contract rate applicable to the PPF account will reduce to that extent.

PPF withdrawal rules on Extension

There is a provision to extend the PPF account after the completion of 15 years. If you do not intend to withdraw the corpus on maturity, you can extend the period in blocks of 5 years. The PPF account gets extended by default if the account is closed, but the amount is not withdrawn. The accumulated amount will continue to earn interest on extension. You can continue to contribute to the account after the extension, or you can extend the account without further contributions. In case you do not make any contribution for one year after the maturity of the account, you will not be allowed to make any deposit to the account thereafter. 

The PPF rules for withdrawal on extension depends on whether there has been a contribution to the account after the extension or it is extended without further contribution.

PPF rules for withdrawal on the extension without further deposit

If the PPF account is kept open for the next five years after maturity, but no further deposits are made, then PPF withdrawal is allowed once in a financial year during the extended five year period. There will be no restriction on the amount withdrawn

PPF rules for withdrawal on extension with further deposits

If the PPF account is extended for a further period of 5 years after maturity, then the PPF rules for withdrawal are slightly different. Only 60% of the accumulated amount can be withdrawn during the extended period. Such withdrawals are permitted only once in a financial year.

  • It should be noted that the deposits made to the PPF account on the extension will not earn interest or will not be eligible for tax benefits if Form 15H is not submitted within one year of maturity of the account.

Procedure for Partial or Complete Withdrawal of PPF

The PPF account should be opened for a period of 15 years, wherein no withdrawals will be allowed before completion of the 15 years period. However, under special circumstances, partial or premature withdrawals are allowed. Such withdrawals can be made only once in a financial year. The PPF withdrawal rules for PPF partial withdrawal or premature withdrawal are as given below.

  • PPF partial withdrawal or complete withdrawal before maturity will be permitted only on completion of 5 years from the date when the account was first opened. That means you will be permitted for premature withdrawal only during the 6th financial year.
  • Only 50% of the total balance in the account as of the end of the financial year prior to the current financial year will be permitted.
  • Such withdrawals are permitted only in the following cases
    • If the spouse, parents or minor children of the account holder is hospitalised owing to critical illness.
    • For higher education expenses of the children of the account holder. Documentary proof of enrolment for higher education to be produced.
    • If the status of the account holder changes from resident to non-resident

The PPF withdrawal form i.e., Form C duly filled should be submitted along with a copy of the passbook should be submitted for the partial or premature withdrawal. Details of the account to which the proceeds have to be credited should be provided. If the account holder is minor, then a declaration that the proceeds will be utilised for the minor and the minor has not attained majority and is still alive has to be given.

Tax Benefits on PPF

The following are the tax benefits on investment in PPF:

  • PPF investment is termed as EEE, i.e. Exempt, Exempt, Exempt under the tax implications category. 
  • The PPF withdrawal on maturity, as well as PPF partial withdrawal, is exempted from tax. 
  • The principal amount, the interest earned as well as the maturity proceeds are also exempted from tax.
  • Tax exemption under Section 80 C of the Income Tax Act 1961 is permitted for an investment up to Rs. 1.50 lakhs. Investment up to a maximum of Rs. 1.50 lakhs for a financial year is permitted under PPF. So the entire 1.50 lakhs will be eligible for tax exemption provided the account holder has not made any other investment eligible for tax exemption under Section 80C.

PPF Withdrawal FAQs

How much withdrawal is allowed from PPF?

The withdrawal amount depends on whether the amount is withdrawn on maturity or before maturity. If PPF withdrawal is made on maturity, then the entire corpus can be withdrawn and the account closed.

If the withdrawal is made before maturity, either as partial withdrawal or premature closure, the amount permitted is as given below.

PPF partial withdrawal or premature closure is permitted only after the completion of 5 years from the date of opening of the account. The amount that can be withdrawn is 50% of the total balance in the account as of the end of the preceding financial year.

On premature closure, the entire amount can be withdrawn. But a penalty by way of reduction in the interest by 1% will be imposed. For instance, if the interest rate is 9% p.a., on withdrawal before maturity, the investment will earn interest at 8% p.a.

Can I close the PPF account after five years?

Normally, the PPF account cannot be closed before the completion of 15 years. But in exceptional cases, as described below, closure of the account is permitted after the completion of 5 years, i.e., during the 6th year.

Premature closure is permitted in the following cases:

  • For funding the treatment expenses of the spouse, minor children or parents of the account holder who are suffering from any life-threatening disease.
  • For higher education of the children of the account holder — Proof of admission from the university should be submitted along with Form C.
  • When the account holder’s resident status changes from resident to NRI

What happens if I don’t withdraw the PPF amount after 15 years?

There is no compulsion to withdraw the PPF amount after 15 years. You can retain the entire corpus in the PPF account for extension in blocks of 5 years. The entire amount will earn interest during the extended period. The extension can be with a further contribution or without a further contribution.

Can I withdraw the PPF amount before maturity?

Yes. You can withdraw the PPF amount before maturity. This withdrawal is permitted only in special cases, as mentioned below.

  • If the withdrawal is for treating the account holer or parents, spouse or minor children of the account holder for critical illness.
  • For further studies of the minor children of the account holder or the account holder himself.  Form C should be accompanied by an enrolment certificate from a recognised University/College along with relevant bills as proof of admission.
  • When the status of the account holder changes from resident Indian to Non-Resident Indian.

What are the SBI PPF withdrawal rules?

SBI PPF withdrawal rules are almost similar to the regular PPF withdrawal rules. Premature closure is permitted after the completion of 5 years from the date of opening the account. Premature closure is permitted only in the following cases.

  • Suppose the funds are required for treatment of a serious ailment of the account holder or the spouse, parents or minor children of the account holder. Valid medical bills as proof of treatment should be submitted.
  • If the funds are for higher studies of the account holder or the minor children of the account holder. Relevant bills proving the admission for higher studies from recognised Universities or Colleges should be submitted.

The customer is permitted to make partial withdrawals once in a financial year after the completion of 6 years from the date of account opening, i.e., from the 7th year onwards. The amount permitted for withdrawal is 50% of the total amount invested as of the end of the financial year prior to the current year or at the end of the 4th year prior to the financial year of withdrawal, whichever is lower.

What are the ICICI PPF withdrawal rules?

ICICI PPF withdrawal rules are as follows:

  • Partial withdrawal can be made once every financial year from the 7th year onwards, i.e., on completion of 6 years from the date of account opening.
  • Loans are permitted between the 3rd and the 6th financial year, after completion of 3 years from the date of account opening, a withdrawal up to 25% of the amount invested. On repaying the loan, another loan will be permitted during the 6th year.

Can PPF be withdrawn online?

Yes. You can apply for PPF withdrawal online. You can view the details of the PPF account by logging in to your internet banking account. If you are eligible for partial withdrawal, you can apply for the same online.

You can download the relevant form online and submit the same to the bank branch. The maximum withdrawal amount permitted will be 50% of the total amount in the account as at the end of the financial year prior to the year of withdrawal.

Is PPF withdrawal taxable?

No. The PPF withdrawal amount, the principal amount as well as the interest earned on the investment are all exempted from tax.

What is the PPF withdrawal form?

PPF withdrawal form or Form C is the form that has to be submitted for withdrawals made in the PPF account. The form consists of 3 sections.

The first section is the Declaration Section, wherein the details of the PPF account number, the number of years since the opening of the account and the amount required have to be provided.

The second section is the Office Section wherein the following details have to be provided.

  • Date of opening the account.
  • Accumulated amount in the PPF account
  • Date of previous withdrawal request
  • The amount available as of the date in the account for withdrawal
  • The amount sanctioned for withdrawal.
  • Date of the transaction along with the signature of the concerned official

The third section is the Bank Section wherein the details of the bank account to which the proceeds have to be credited have to be mentioned.

What is the PPF withdrawal process for NRIs?

NRIs are not permitted to invest in PPF. However, if they have commenced the investment as resident Indians, the account can continue till maturity and thereafter it can be closed. To close the account, the account holder has to submit the relevant form along with a copy of photo identity, the PPF account passbook and a cancelled cheque of the NRO account to which the proceeds have to be credited.

If the NRI is not available in-person to complete the process, a representative can complete the process by holding an authorisation letter from the account holder. The relevant documents have to be attested by the branch manager of the bank branch where the NRO account is maintained. On submitting the attested documents to the bank branch where the PPF account is maintained, the account will be closed, and the proceeds will be credited to the NRO account.