The Public Provident Fund (PPF) is a long-term savings scheme in India, offering tax benefits and attractive interest rates. While it encourages long-term investment, there are provisions for partial and complete withdrawals under specific conditions. Here’s a comprehensive guide to PPF withdrawal rules as of 2025:
Complete Withdrawal: Maturity Rules
- Maturity Period: A PPF account matures after 15 years from the end of the financial year in which the account was opened.
- Withdrawal at Maturity: Upon maturity, the entire balance, including principal and interest, can be withdrawn tax-free.
- Extension Options:
- Without Contributions: The account can be extended in blocks of 5 years without further contributions. Interest continues to accrue, and one withdrawal is permitted per financial year without any limit on the amount.
- With Contributions: To continue contributions post-maturity, Form H must be submitted within one year of maturity. During each 5-year extension block, one withdrawal is allowed per financial year, limited to 60% of the balance at the beginning of the extension period.
Partial Withdrawal: Before Maturity
- Eligibility: Partial withdrawals are permissible from the 7th financial year after the account opening year.
- Withdrawal Limit: The maximum amount that can be withdrawn is the lesser of:
- 50% of the balance at the end of the 4th financial year preceding the year of withdrawal, or
- 50% of the balance at the end of the immediate preceding financial year.
- Frequency: Only one partial withdrawal is allowed per financial year.
Premature Closure: Before 15 Years
- Eligibility: Premature closure is allowed after 5 years from the end of the financial year in which the account was opened, under specific circumstances:
- Treatment of serious ailments or life-threatening diseases of the account holder, spouse, dependent children, or parents.
- Higher education expenses of the account holder or dependent children.
- Change in residency status (i.e., becoming a Non-Resident Indian).
- Penalty: A 1% reduction in the interest rate is applied to the entire duration of the account upon premature closure.
Withdrawal Process
- Form Submission: Fill out Form C for partial withdrawals or Form C/Form H for extensions with contributions.
- Documentation: Submit the form along with the PPF passbook to the bank or post office where the account is held.
- Processing: Upon verification, the requested amount will be credited to the linked bank account.
Tax Implications
- Contributions: Eligible for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh per financial year.
- Interest Earned: Completely tax-free.
- Withdrawals: Both partial and complete withdrawals are exempt from income tax.
Understanding these rules can help you make informed decisions about managing your PPF account, ensuring both liquidity in times of need and the benefits of long-term savings.
