Public Provident Fund (PPF) is a favourite among many investors because of its attractive features. The government backs it, and so it is free from risk, the interest rates are attractive, and several tax benefits help you save on income tax. One thing you need to note, it has a lock-in period of 15 years. Which means if you have long-term investment milestones, a PPF is your best option.
But the PPF Account withdrawal rules may not be as inflexible as you may think since you can make partial withdrawals.
So let’s look at PPF partial withdrawal rules if you want to take out money from the account, or close it prematurely before the 15 years are up.
PPF withdrawal rules 2021
After the end of the tenure: The 15 years in consideration is after the end of the financial year in which the initial contribution was made. That is, if you made the initial contribution on 15 June 2010, the maturity date would be 1 April 2026. If you like, you can continue with the scheme for another five years without making fresh contributions and will be able to make partial withdrawals.
Completion of seven years: According to PPF partial withdrawal rules, you can withdraw up to 50 percent of the amount in your PPF Account after seven years, starting from the end of the year you made your first contribution. You can make only one partial withdrawal each year. To make the withdrawal, you will have to submit the PPF passbook and an application to the bank/ post office. The amount withdrawn is exempt from income tax. According to PPF Account withdrawal rules, the amount would be lower of these two: 50 percent of the balance in the account at the end of the financial year, or 50 percent of the balance at the end of the fourth financial year preceding the year of application.
Premature closure: You are allowed to close the PPF account before the 15-year tenure in certain situations. For example, getting treatment for a life-threatening disease suffered by the account holder or dependents, or for higher education.
Loans: You can avail loan from your PPF Account from the third financial year of the initial deposit by paying an interest rate of 1 percent above the PPF rate. The maximum amount of loan will be 25 percent of the balance at the end of two years preceding the year in which you apply for the loan. In the event of the demise of the account holder, the nominee/ legal heirs have to pay the interest on any unpaid loans. This could be adjusted when the account is being closed.
Procedure for withdrawal: Under PPF account withdrawal rules, you will have to submit Form C, which will be available at the bank or post office. You have to mention the account number and amount you want to withdraw in the form, put your signature and stick a revenue stamp on it. After that, you have to submit it along with the passbook. The approved amount gets credited directly into your savings account.
Now that you know all about PPF Account withdrawal rules, you can withdraw money whenever the need arises.
To know more about opening a PPF Account at HDFC Bank, click here.
Read more on how to invest in a Public Provident Scheme here.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
