PPF stands for Public Provident Fund scheme. It is a long-term investment avenue that lasts for 15 years. One can extend the investment period by 5 years for infinite times. Before the completion of 15 years, the money deposited in this account can’t be withdrawn. However, there are some criteria under which one can do partial PPF withdrawal from the account. In this article, we will discuss what are these PPF withdrawal rules? and how can you withdraw the money from the PPF account?
What is PPF Account?
PPF account is the central government-managed investment scheme for the long term. The account once open must remain active for a minimum of 15 years. Since this account is managed by the central government, the investment done in this account is 100% secure and returns are assured.
PPF account is very famous among Indian households as a small saving scheme. A yearly investment of ₹ 500/year is required to keep the account active. PPF account is the first choice for people wanting safe and guaranteed returns.
Investment done in the PPF account is exempted from taxes. It comes under Exempt-Exempt-Exempt (EEE) category. This means the money invested in the PPF account during the financial year is exempted from the individual’s taxable income. Not only that, the interest earned on the deposits are tax-free returns when you withdraw them at the maturity date.
The interest payable on the PPF account is decided by the central government every quarter. The latest interest rate on the PPF account is 7.1% for the period of 1st April 2021 to 30th June 2021. The deposits are 100% secure and the government is bound to give your investment amount + interest earned on the deposits under any circumstances.
PPF Withdrawal Rules
Since this investment is for a minimum of 15 years, pre-mature withdrawal is not allowed. However, there are certain criteria under which the withdrawal can be done before the completion of 15 years. Let’s check these PPF withdrawal criteria.
Partial PPF withdrawal is allowed under the below circumstances only. The investor must fulfill the below criteria for withdrawing partial balance from the PPF account.
- The PPF account must be at least 5 years old and active. Only after the completion of the 5th financial year, partial withdrawal can be possible.
- There is a cap on the amount one can withdraw from the PPF account as a partial withdrawal, the criteria for the same is as below. The lower amount from the below will be eligible for withdrawal.
50% of the account balance as at the end of the financial year, preceding the year of withdrawal, or
50% of the account balance as at the end of the 4th financial year, preceding the year of withdrawal
Form C must be filled in and submitted to the bank where the PPF account is running.
The partial withdrawal can be done for below scenario only.
- If there is any medical emergency in the family.
- If you want to send your children abroad for higher study.
- If you have purchased a new house and want to pay as a down payment.
- If there is a marriage of the PPF account member or his/her daughter/son’s marriage.
- If the member’s property is damaged by any natural calamity like earthquake, flood, tsunami, etc.
As mentioned earlier, the PPF account comes with a lock-in period of 15 years. However, there are some circumstances under which you can withdraw money from your PPF account before the completion of the lock-in period. Let’s discuss these circumstances in detail.
Partial Withdrawal
PPF account holders can make partial withdrawals from their account after the completion of the 6th financial year. The partial withdrawal can be made up to 50% of the balance available in the account at the end of the 4th financial year immediately preceding the year of withdrawal or the year preceding the year of withdrawal, whichever is lower.
For example, if you want to withdraw money from your PPF account in the financial year 2022-23, the balance available in your account at the end of the financial year 2018-19 or 2021-22, whichever is lower, will be considered for calculating the withdrawal amount.
You can make only one partial withdrawal in a financial year. The partial withdrawal amount is tax-free.
Loan against PPF
PPF account holders can avail of a loan against their PPF account from the 3rd financial year to the 6th financial year. The loan amount can be up to 25% of the balance available in the account at the end of the 2nd financial year immediately preceding the year of the loan application.
For example, if you want to avail of a loan against your PPF account in the financial year 2022-23, the balance available in your account at the end of the financial year 2020-21 will be considered for calculating the loan amount.
The interest rate on the PPF loan is 1% higher than the prevailing interest rate on PPF. The loan has to be repaid within 36 months, and the interest on the loan has to be paid upfront at the time of availing the loan.
Premature Closure
PPF account holders can close their account prematurely after completion of 5 years in case of medical emergencies or life-threatening diseases. In such cases, the account holder needs to submit a medical certificate along with the application for premature closure of the account.
In case of the premature closure of the PPF account, the account holder will receive the interest at the rate applicable to the account till the date of closure. However, the interest rate applicable for premature closure of PPF is lower than the regular PPF interest rate. The premature closure interest rate is 1% lower than the regular interest rate.
Death of the Account Holder
In case of the death of the PPF account holder, the nominee or legal heir of the account holder can claim the PPF amount. The nominee or legal heir needs to submit the necessary documents along with the application for withdrawal of the PPF amount. The PPF amount will be paid to the nominee or legal heir along with the interest accrued till the date of death of the account holder.
PPF Withdrawal Rules After Maturity
After the completion of the lock-in period of 15 years, the PPF account matures. The account holder has the option to withdraw the entire amount or extend the account for a further period of 5 years. Let’s discuss the PPF withdrawal rules after maturity in detail.
Withdrawal of Entire Amount
After the completion of the lock-in period of 15 years, the account holder can withdraw the entire amount available in the PPF account. The entire amount can be withdrawn in a lump sum, and there is no limit on the amount that can be withdrawn.
The withdrawal of the entire amount is tax-free, and the interest earned on the PPF account is also tax-free.
| PPF Withdrawal Options | Online | Offline |
|---|---|---|
| Partial Withdrawal | Yes | Yes |
| Loan against PPF | Yes | Yes |
| Premature Closure | Yes | Yes |
| Death of the Account Holder | Yes | Yes |
| Withdrawal of Entire Amount | Yes | Yes |
Both online and offline modes offer the same PPF withdrawal options, and the process and rules remain the same for both. However, the mode of application and processing differs.
In the case of online mode, the investor can initiate the PPF withdrawal request through the online portal of the bank or post office. The investor needs to provide the necessary details and documents online, and the processing will be done electronically.
On the other hand, in the case of offline mode, the investor needs to submit the withdrawal request along with the necessary documents physically to the bank or post office. The processing of the withdrawal request will be done manually, and it may take more time than the online mode.
In both modes, the investor needs to provide the necessary documents like PPF passbook, ID proof, address proof, and other relevant documents as per the specific withdrawal option.
Overall, while the options and rules for PPF withdrawal are the same for both online and offline modes, the online mode offers greater convenience and faster processing. However, the choice between online and offline mode may depend on the preference of the investor and the availability of online facilities in their region.
Extension of PPF Account
After the completion of the lock-in period of 15 years, the account holder can also extend the PPF account for a further period of 5 years. The account can be extended for any number of blocks of 5 years.
During the extended period, the account holder can make partial withdrawals from the account subject to the condition that the total of all withdrawals during the extended period should not exceed 60% of the balance available in the account at the beginning of the extended period.
The interest rate applicable during the extended period is the same as the regular PPF interest rate.
How to apply for Partial PPF Withdrawal?
For partial PPF withdrawal, the member needs to fill in form C and submit it to the bank/post office where the PPF account is running. The form needs to be filled in after check the eligibility based on the above criteria. The form once submitted to the bank will take some time to check the eligibility criteria. Once the application is approved by the central government, the funds will be released to the bank account you have mentioned in the application.
The entire process takes about 10 to 15 days from the date of your application. The interest earned on the accumulated amount in the account will be on a pro-rata basis to the date of your withdrawal.
PPF Account Eligibility Criteria
Here is the criteria for opening a PPF account in India.
- Only Indian residents can open a PPF account.
- A resident Indian who has become NRI after opening a PPF account can continue the account till its maturity.
- For minors, the parents or the guardian can open the PPF account.
- Member can open only one PPF account in his/her name.
- A joint PPF account is not allowed.
Documents Required for PPF Account
Now as we know the eligibility criteria, let’s check the documents required for opening the PPF account.
- The account opening form, usually available at the bank or the post office wherever you want to open the account.
- Valid ID proof like Aadhaar card, Voter ID card, Driving License, etc.
- Valid/current address proof.
- PAN card.
- Passport size photo
- Nomination form – for declaring the name of the nominee.
Where Can You Open a PPF Account?
Here is the list of the banks where you can open PPF account in India.
| ICICI Bank | HDFC Bank | Axis Bank |
| Indian Overseas Bank | Bank of Baroda | State Bank of India |
| Corporation Bank | Bank of India | Central Bank of India |
| Canara Bank | Indian Bank | Union Bank of India |
| Punjab National Bank | United Bank of India | IDBI Bank |
Apart from the above banks, you can open the PPF account with Indian post office.
How to check the PPF Balance?
You can check your PPF balance in various ways. The most popular way of checking your PPF account balance is online mode. Where you can go to the PPF website and check your balance by entering your ID and password. Most of the banks where you can open your PPF accounts are providing an online facility for checking PPF balance. I have written a detailed article on how to check the PPF account balance? Check that article for various ways of checking PPF balance.
Rules for PPF Nomination
Nomination in PPF account is a must do thing. This will help you to withdraw the fund in case the member is No. more. Here are some of the points you should consider before applying for PPF nomination.
- You can not declare a minor as a PPF account nominee.
- You can nominate your parent, spouse, child, relative, friend as a nominee.
- The nominee form must be signed by the member in presence of two witnesses.
- You should give nominations at the time of account opening only.
- You can, later on, change the nominee name if you wish. You need to fill in form F for that.
PPF Account – FAQs
The PPF account is for 15 years, however, you can withdraw partial (50%) of the account balance after completion of the 5th financial year.
As I mentioned above, the partial withdrawal is allowed after completion of 5th financial year.
Well, that depends on your deposit transactions and the rate of interest declared by the central government from time to time.
18 years is the minimum age for opening a PPF account in India.
No., You cannot have 2 PPF account in your name. There is only 1 PPF account granted per person.
No, you cannot have a joint PPF account. It must be in the individual name only.
Well, there is no difference it makes that you open a PPF account in any bank. The interest rates and all the other standard guidelines will remain the same. There could be a customer service difference from bank to bank. As per me, you should open a PPF account with the bank where your primary bank account is.
It is managed by the central government and it is 100% safe and secure. The central government is bound to give your money back under any circumstances.
You have two options, either withdraw all the funds and close the PPF account. OR you can extend the PPF account tenure by 5 years.
The PPF account can be transferred from the bank to the post office or vice versa. It can also be transferred between different branches of the same bank.
When should you withdraw from PPF?
Withdrawal from PPF should be done only when it is necessary, and the investor should carefully consider the reasons for withdrawal. Since PPF is a long-term savings scheme, premature withdrawal may affect the returns on the investment.
Here are some scenarios when an investor may consider withdrawing from PPF:
Emergency Funds
PPF can be used as an emergency fund, and the account holder can make partial withdrawals after the completion of the 5th financial year. In case of a financial emergency, the account holder can withdraw up to 50% of the balance available in the account at the end of the fourth year immediately preceding the year of withdrawal. However, it is advisable to use PPF as an emergency fund only in case of unavoidable circumstances.
Higher Education
PPF can be used to fund higher education for the account holder or their children. The account holder can withdraw up to 50% of the balance available in the account at the end of the fourth year immediately preceding the year of withdrawal for the higher education of the account holder or their children.
Medical Emergencies
PPF can be used to fund medical emergencies for the account holder, their spouse, children, or dependent parents. The account holder can make partial withdrawals for medical treatment of self, spouse, children or dependent parents, provided the amount withdrawn is not more than the actual medical expenses.
Retirement
PPF is a long-term savings scheme and can be used to accumulate retirement corpus. After the completion of the lock-in period of 15 years, the account holder can withdraw the entire amount or extend the account for a further period of 5 years. The investor should consider their financial needs after retirement before withdrawing from the PPF account.
Conclusion:
In conclusion, PPF withdrawal options are available to investors for various reasons, including partial withdrawal, loan against PPF, premature closure, and withdrawal of the entire amount. The investor can choose any of these options based on their financial needs and circumstances.
Both online and offline modes are available for PPF withdrawal, and while the options and rules remain the same for both, the online mode offers greater convenience and faster processing.
However, the investor should carefully consider the impact of PPF withdrawal on their investment returns before making any decision. PPF should be considered a long-term savings scheme, and premature withdrawal should be avoided to maximize the returns on investment.
The PPF account is the famous saving/investment option for Indian households. It offers attractive returns on the funds. The power of compounding works in your favor if you regularly keep depositing funds in the PPF account and never withdraw from it. But recently the central government has amended the PPF withdrawal rules and made it easy for the members to withdraw.
PPF withdrawal rules and options can seem complex, and investors should seek the guidance of a financial advisor before making any significant investment decisions. Nonetheless, PPF remains a reliable investment option for those looking for a safe and guaranteed return on their investment.