PPF withdrawal: 5 latest rules you must know

,ET Online|

Dec 23, 2022, 03:21:02 PM IST

Key things to know

Due to its appealing features, Public Provident Fund (PPF) is a favourite among many investors. Backed by the government, it is a risk-free investment that also helps you to reduce your income tax burden.

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PPF withdrawal rules explained

PPF has a 15-year lock-in duration. Therefore, a PPF is your best choice if you have long-term investment milestones. However, because partial withdrawals are permitted, the PPF Account withdrawal requirements might not be as rigid as you might believe.

If you want to withdraw money from the account or close it prematurely before the 15 years, the following are the rules for partial withdrawals, according to the HDFC Bank website.

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PPF withdrawal rules 2021

After the end of the tenure: The new PPF withdrawal guidelines 2021 maintain the same partial withdrawal rule after 15 years. The 15 years is calculated from the end of the fiscal year in which the initial contribution was made. So, if you contributed on June 15, 2010, the maturity date would be April 1, 2026. You can continue to participate in the plan for another five years without making new payments and will be allowed to make partial withdrawals.

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PPF Partial withdrawal rule

Partial withdrawal is allowed under the Public Provident Fund scheme.

You can withdraw up to 50% of the amount in your PPF Account after seven years, beginning with the end of the year you made your initial contribution. You can only make one partial withdrawal each year. To withdraw funds, you must present the PPF passbook and an application to the bank/post office. The sum withdrawn is not subject to income tax.

This is also unchanged in the PPF withdrawal rules for 2021.

The sum would be the lesser of these two, according to PPF Account withdrawal rules: 50% of the account balance at the end of the fiscal year, or 50% of the amount at the end of the fourth fiscal year preceding the year of application.

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Premature closure

In certain circ*mstances, you may be able to close your PPF account before the 15-year term expires. For example, seeking treatment for a life-threatening sickness that the account holder or dependents are suffering from, or paying for higher education. The PPF withdrawal regulations 2021 have included another scenario in which the PPF account can be liquidated prematurely — when the account holder's residency status changes.

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Loan

The loans that can be obtained against the balance in the account have changed under the PPF exit regulations 2021. Under the original PPF withdrawal terms, you may obtain loans from your PPF account beginning in the third fiscal year of the initial deposit by paying a 2% interest rate above the PPF rate. This has been decreased to 1% under the PPF withdrawal guidelines for 2021.

The maximum loan amount is 25% of the sum at the end of the two years preceding the year in which you request the loan. In the event of the account holder's death, the nominee/legal heirs must pay the interest on any unpaid loans. This could be adjusted when the account is closed.

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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. In the form, you must include the account number and amount you intend to withdraw, as well as your signature and a revenue stamp. After that, you must submit it along with the passbook. The authorised amount is credited straight to your savings account, or you can request a demand draft.

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PPF withdrawal: 5 latest rules you must know - Key things to know (2024)

Key things to know

PPF withdrawal rules explained

PPF withdrawal rules 2021

PPF Partial withdrawal rule

Premature closure

Loan

Procedure for withdrawal