The government-backed Public Provident Fund (PPF) continues to be one of India’s most reliable long-term savings schemes, especially for conservative investors. Although PPF has a 15-year lock-in period, it permits partial withdrawals before maturity under certain conditions.
Here’s a detailed guide on the steps to withdraw PPF and key rules —
How to withdraw PPF funds? Step-by-step process
Step 1: To withdraw funds, an account holder must download the PPF withdrawal form, also known as Form C, from their bank’s website or from the bank branch.
Step 2: Enter the necessary details on the PPF form, which includes the amount of funds to be withdrawn and the number of years the account has been active.
Step 3: Attach a copy of the PPF passbook with Form C.
Step 4: Submit these documents to the respective bank branch.
Notably, any outstanding PPF loan will be deducted from the eligible withdrawal amount, according to CA Chandini Anandan, tax expert at Clear Tax.
What are the types of PPF withdrawal?
The government has set PPF withdrawal rules that specify when and how you can access your invested funds. These rules are categorised into three main types, which are partial withdrawal, premature closure, and withdrawal after maturity.
Partial withdrawal
Premature or partial withdrawals are permitted five years after the end of the financial year in which the PPF account was opened. For example, if a PPF account was opened in 2010-11, then the withdrawal can be taken during or after 2016-17.
What is the maximum partial withdrawal amount?
The maximum amount that can be partially withdrawn is up to 50% of the balance at the end of the fourth preceding year or at the end of the preceding year, whichever is lower.
If the account becomes inactive (i.e., the ₹500 minimum is not deposited in any year), it is marked as ‘discontinued’, and withdrawals are not allowed until the account is revived.
Understanding PPF partial withdrawal: An illustration
Explaining how the partial PPF withdrawal amount is determined, CA Chandini Anandan cited an example: Suppose Mr A opened a PPF account on 31 January 2021 (FY 2020–21) for his retirement savings. He initially deposited ₹1 lakh, and continued contributing ₹10,000 per year in regular instalments, keeping the account active.
By 31 July 2026, Mr A urgently needs funds and decides to make a partial withdrawal. The calculation works as follows:
- Balance at the end of the 4th year preceding the year of withdrawal (FY 2022–23): ₹1,57,000, including interest.
- Balance at the end of the 5th year (FY 2025–26): ₹2,26,000, including interest.
The lower of the two, that is ₹1,57,000, is considered for calculating the 50% withdrawal limit. Hence, Mr A is eligible to withdraw ₹78,500.
If he has an outstanding PPF loan of ₹10,000, the net eligible withdrawal reduces to ₹68,500.
Key rules of PPF withdrawal
On completing the 15-year term of a PPF account, an account holder can withdraw the entire amount and close the account, or extend the account.
“To keep a PPF account active, investors must deposit at least ₹500 every financial year. The account matures after 15 years, but can be extended in 5-year blocks upon request. The entire balance can be withdrawn at the end of the maturity period,” the expert noted.
Although PPF is considered a long-term savings scheme in India, it allows partial withdrawals after five years for investors who need funds, aiming to provide flexibility and security. However, investments in PPF must depend on an individual’s financial goals and needs.
Disclaimer: This is an educational article and should not be considered an investment strategy. We advise investors to check with certified experts before making any investment decisions.
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