PPF Withdrawal Rules: Money can be withdrawn from Public Provident Fund (PPF) even before the maturity of 15 years. Know under which special circumstances it is possible, what are its rules, conditions and tax related provisions. Complete information about PPF pre-mature withdrawal for children’s education, serious illness or other needs.
PPF Withdrawal Rules: PPF has been opened, money is being accumulated well, tax is also being saved… but this long wait of 15 years. Is there any way to withdraw some money even before this if needed? If such questions arise in your mind about PPF, then you are at the right place. Public Provident Fund (PPF) is one of the most favorite small savings schemes in India. The reason for this is also clear – good interest rate, guarantee of security on investment, and most importantly EEE status, that is, no tax on investment, interest and maturity. But, its lock-in period of 15 years often forces people to think, especially when a big financial need suddenly arises.
So can’t this ’15-year wall’ of PPF be broken? The answer is– yes, it can be broken. Under certain terms and conditions, you can withdraw money from your PPF account even before the completion of 15 years. Come, today in this “Kaam Ki Baat” we will understand every aspect of premature withdrawal from PPF in detail, so that you can use your investment at the right time and in the right way.
1. 15-Year Cycle of PPF
PPF is primarily designed keeping in mind long-term financial goals, such as retirement, children’s higher education or marriage. Its 15-year lock-in period ensures that your money continues to grow gradually with the power of compounding and you are able to accumulate a large tax-free corpus. The government sees it as a disciplined savings and investment tool. But one cannot say when what need may arise in life. That is why the government has also provided the facility of premature withdrawal from PPF under certain special circumstances.
2. Can you withdraw PPF money before 15 years? (PPF Withdrawal Before 15 Years)
You can prematurely close your PPF account or make partial withdrawal after completion of 5 financial years of opening it under certain special circumstances. Note, “financial year” means 1 April to 31 March.
Conditions for premature closure (after 5 years)
Serious life-threatening illness
For treatment of any serious or life-threatening illness of the account holder, his spouse, dependent children or parents. (Medical certificate will have to be provided for this).
Higher education of children
For fees or other expenses for higher education of the account holder or his dependent children. (Certificate from the concerned educational institution will have to be provided).
Change of place of residence (becoming an NRI): If the account holder is permanently settling abroad or his citizenship has changed.
What about premature closure?
On premature closure, the interest rate is reduced by 1% from the date on which the account was opened to the date of closure.
3. Partial Withdrawal
If you do not want to close the account but need some money, you can make partial withdrawal from the 7th financial year of opening the PPF account.
How much money can be withdrawn?
You can withdraw a maximum of 50% of the balance at the end of the previous financial year or the end of the fourth financial year immediately preceding the year in which you are making withdrawal (whichever is lower).
- How many times? Partial withdrawal can be made only once in a financial year.
- What about tax? The best thing is that partial withdrawal made from PPF is completely tax-free. There is no tax on it.
- No lock-in: The first 6 financial years are completely locked-in, which means you cannot withdraw any money in these 6 years (you can take a loan, which we will discuss later).
4. Loan Facility on PPF
If you need money before 5-6 years, you can also take a loan on your PPF account.
- When can you take a loan? You can apply for a loan from the third financial year of opening a PPF account to the sixth financial year.
- How much loan will you get? You can get a loan of up to 25% of the balance at the end of the second financial year immediately preceding the financial year in which you are applying for the loan.
- Interest rate: 1% more interest has to be paid on the loan than the interest rate on PPF. (Earlier it was 2%, now it has been reduced to 1%).
- Repayment period: The loan has to be repaid within 36 months.
5. What after 15 years? What After 15 Years? Full Withdrawal or Extend?
When your PPF account completes 15 financial years, you have several options.
- Full Withdrawal: You can withdraw the entire amount (deposit amount + interest) by filling Form C and depositing it in your bank or post office. This amount will be completely tax-free.
- Extension without investment: You can extend your account any number of times in blocks of 5 years without depositing any new money. You will continue to earn interest on your existing balance.
- Extension with investment: You can extend your account in blocks of 5 years even by depositing money every year. For this, Form H has to be filled and submitted one year before maturity.
6. What happens on the death of the account holder?
Unfortunately, if the PPF account holder dies before maturity, the entire amount deposited in PPF along with interest is given to the nominee or legal heir nominated by him. In such a situation, the condition of completion of 5 years also does not apply, that is, the nominee can withdraw the money anytime. After the death of the account holder, that PPF account cannot be continued further, it is closed.
PPF is not a rigid scheme
PPF is definitely a great investment option that gives you safe and tax-free returns in the long term. But, as we have seen, it is not as rigid as it is understood. Under special circumstances and by following some rules, you can use your hard-earned money even before the maturity of 15 years, whether it is partial withdrawal, pre-mature closure or in the form of loan. It is important to understand these terms and conditions thoroughly so that you can take the right decision at the right time.
Disclaimer
This information is for information and educational purposes only and should not be considered as financial advice. The rules and interest rates related to PPF change from time to time by the Government of India. Before making any investment or withdrawal decision, check the official rules and consult your financial advisor if necessary.
Most Read Articles:
- PPF Investment: Open a government account, after 20 years will get the benefit of Rs 1.33 crore, know the details of the scheme
- Indian Railways New Rules: Good news for passengers! Now travel in 3AC at the fare of sleeper, know railways new rules
- Credit Card Link UPI: Link your credit card to UPI from home, know step-by-step guide
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
