PPF Scheme: PPF is considered one of India’s safest, tax-free, and long-term savings schemes, offering excellent returns. However, it has a lock-in period, meaning you can’t withdraw funds at will. The maturity period of a PPF account is 15 years. After this period, you can withdraw the entire deposit, including interest. However, sometimes, you may need money earlier due to an emergency. Let’s learn how to make a partial or premature withdrawal before the PPF account matures.
PPF Withdrawal Rules
A PPF account is a disciplined savings tool, but given the uncertainties of life, the government has also allowed withdrawals under certain conditions.
Withdrawal After Maturity
When your PPF account completes 15 years, you can withdraw the entire amount, including interest, without any penalty. The most attractive feature of PPF is that the withdrawal amount is completely tax-free. If you wish to continue earning interest, you can extend the account in five-year blocks and reinvest the maturity amount.
Partial Withdrawal
If you need money before the account matures, you can make a partial withdrawal, subject to certain conditions. This facility is available after six financial years from the date of account opening, i.e., from the seventh financial year. You can withdraw up to 50% of the total deposit. This 50% limit applies to the balance at the end of the fourth financial year immediately preceding the financial year or the balance at the end of the financial year immediately preceding the withdrawal, whichever is lower. This partial withdrawal facility is available only once per financial year. To do this, you must fill out and submit Form C, available at your bank or post office.
Premature Closure
Although this account is designed for long-term savings, premature closure is permitted under certain circumstances, but only after five years have passed from the date of account opening. Account closure is permitted only in certain emergencies, such as: for treatment of a life-threatening or critical illness of the account holder, spouse, or dependent children; for higher education expenses of the account holder or dependent children; or in case of a permanent change in residence status.
A condition applies: the government deducts one percent of the interest rate on the deposit from the date of account opening or the beginning of the extension period. For this process, you must submit Form 5 along with the required documents to the bank or post office where you hold your PPF account.
In the event of the account holder’s death
If the account holder dies before the maturity period, the rules change. In such a situation, the nominee or legal heir can receive the entire amount immediately. The lock-in period of 15 years is not applicable in this case.