PPF Withdrawal Rules Explained

The Public Provident Fund (PPF) is a popular savings scheme in India and is considered safe as it offers good returns and gives tax benefits. Many people use this plan to save money for retirement, a child’s education or a house.

However, there are still many people who do not know how and when they can withdraw money from their PPF account.

Can you take out money before 15 years? What happens if you want to close the account early? Is there any tax on withdrawals?

Let’s get answers to all these questions with the following guide. Here, we will explain PPF withdrawal rules in simple words so you can easily understand how to use your PPF account when needed.

PPF Account Tenure

A PPF account has a minimum lock-in period of 15 years and this means you cannot withdraw the full amount before this period. Once your PPF account completes 15 years, you have three options. You can withdraw the full amount and close the account, extend the account for 5 years and continue adding money, or extend the account for 5 years without adding money, but keep earning interest.

Partial Withdrawals Before Maturity

Though PPF is a long-term savings option, you have the option of partial withdrawals and early closure in some situations. If you need money before 15 years are completed, you can withdraw a part of your savings. However, there are the following rules:

• You can make a partial withdrawal only after 6 years of opening the PPF account.
• You can withdraw up to 50% of your PPF balance at the end of the 4th year from the date of account opening.
• You can withdraw only once a year.

Let’s understand it with an example:

If your PPF balance in 2020 was ₹5 lakh, and in 2024, it is ₹8 lakh, then the maximum you can withdraw is ₹4 lakh (50% of ₹8 lakh).

Premature Closure of PPF Account

As mentioned earlier, PPF benefits are meant to provide long-term savings. However, you can still close the account early in some special cases, like:

• In case of a medical emergency where you, your spouse or your children have a serious illness.
• If you or your child needs money for college.
• If you become a Non-Resident Indian (NRI).

However, there are certain conditions for premature closure:

• Your PPF account must be at least 5 years old.
• A 1% penalty is charged on the total interest earned.
• You must provide proof related to your reason, whether it is medical illness or higher education.

Withdrawal Rules Upon Maturity

When your Public Provident Fund account completes 15 years, you can withdraw money in the following ways:

• Full Withdrawal: You can take out all the money and close your account.
• Extend with Deposits: If you want to continue saving, you can extend the account for 5 more years and keep adding money. To do this, you must fill out Form H within one year after the account matures.
• Extend Without Deposits: If you do not fill out Form H, your account will continue, but you cannot deposit more money. You will still earn interest and can withdraw money once a year.

Tax Implications of PPF Withdrawals

One of the best PPF benefits is that all withdrawals are tax-free. Yes, under Section 80C of the Income Tax Act, the withdrawals under PPF are exempt from taxation. Whether it is partial withdrawals before maturity, full withdrawal after 15 years or interest earned on the PPF balance, you do not need to pay any tax. This is why PPF is one of the best tax-saving investments in India.

Procedure for Making Withdrawals

Here are the steps you need to follow for PPF withdrawals:

Step 1: Go to your bank or post office where you have the PPF account.

Step 2: Fill out Form C with your PPF account details and the amount you want to withdraw. Form C is also called Form 2 in some banks.

Step 3: Provide the required documents, if applicable.

Step 4: Wait for approval.

Step 5: Once approved, the money gets transferred to your bank account.

Note: For premature closure, you would need to submit a premature closure request form with supporting documents.

Common Mistakes and Considerations

Here are some common mistakes people make with Public Provident Fund withdrawal:

• Forgetting to extend the account.
• Trying to withdraw too early- you can only withdraw after 6 years.
• Assuming you can withdraw any amount- partial withdrawals are limited to 50% of your balance.
• Not knowing about the 1% penalty for premature closure.
• If you become an NRI, you cannot extend your PPF account, and hence, you need to withdraw the amount.

Also Read : New Income Tax Slabs 2025

Conclusion

The Public Provident Fund (PPF) is a great way to save money for the future. However, make sure you are aware of the aforementioned PPF withdrawal rules.

Now, if you need urgent money, waiting for PPF withdrawals may not be the best option for you. This is where you can use the CASHe app. CASHe offers quick personal loans of up to ₹3 lakh at competitive interest rates. You can apply online and get your loan approved within minutes.

Download the CASHe app today and get the financial help you need right away.