How To Withdraw PPF Amount?

Mar 11th 2024

Fixed Income

Due to its appealing features, the Public Provident Fund (PPF) is a favorite among a lot of investors. Because the government backs it, there is no risk involved, the interest rates are appealing, and you can save money on income tax thanks to several tax perks. You should be aware that there is a 15-year lock-in term. This implies that a PPF is your greatest choice if you have long-term investing milestones.

What is a Public Provident Fund (PPF)?

A Public Provident Fund (PPF) is a long-term, small savings vehicle that is well-liked by a wide range of age groups because of its convenience of opening accounts at post offices and banks, guaranteed returns, tax benefits, fair interest rates, and substantial lump amount upon maturity. In addition, a donor to a PPF may take advantage of partial withdrawals, early account closure in the event of an emergency, and a lending facility against the funds that have accrued.

The compound yearly growth on the interest generated, however, is the high point. The updated announcement from the Finance Ministry states that the interest rate on PPF deposits is currently 7.1%.

PPF Withdrawal Rules

After the End of the Tenure: The financial year in which the first contribution was made ends at the end of the 15 years under consideration. That is, the maturity date would be April 1, 2026, assuming your initial payment was made on June 15, 2010. You have the option to PPF withdraw part of your funds and continue the scheme for an additional five years without having to make any new contributions.
Completion of Seven Years: PPF partial withdrawal guidelines provide that after seven years, beginning from the end of the year you made your initial contribution, you may withdraw up to 50% of the total amount in your PPF Account. A single partial withdrawal is permitted per year. You must bring the PPF passbook and an application to the bank or post office to make the withdrawal. The withdrawal amount is not subject to income tax. The amount would be 50% of the account balance at the end of the financial year or 50% of the balance at the end of the fourth financial year before the year of application, whichever is lower under PPF Account withdrawal regulations.
Premature Closure: In some circumstances, you may be able to close your PPF account before the 15-year term. For instance, funding further schooling or medical care for a life-threatening illness afflicting the account holder or their dependents.
Loans: Starting in the third fiscal year following the initial deposit, you can obtain a loan from your PPF Account by paying an interest rate that is one percent higher than the PPF rate. The maximum loan amount will be equal to 25% of the remaining balance at the end of the two years before the year you apply. Should the account holder pass away, the nominee or legal heirs will be responsible for covering the interest on any outstanding debts. This may need to be changed while the account is being
Procedure for Withdrawal: Form C, which can be obtained at the bank or post office, must be submitted by the PPF account withdrawal regulations. The document must be filled out with your account number and desired withdrawal amount, your signature, and a revenue stamp. Following that, you must turn it in with the passbook. Your savings account is immediately credited with the authorized amount.

Premature PPF Money Withdrawal and Closure:

On an application made in the prescribed form to the accounts office, an account holder may request the early closure of his account or the account of a minor or person of unsound mind for whom they are the guardian, for any of the following reasons:

The account holder, spouse, dependent children, or parents may receive treatment for a life-threatening illness upon production of supporting documentation and medical reports confirming the condition from the treating medical authority. The account holder or dependent children may pursue higher education at an accredited institution of higher learning in India or abroad upon the submission of documents and fee bills confirming admission.
Upon the account holder's change of residency as evidenced by a copy of their passport, visa, or income tax return: With the caveat that no account under this Scheme may be closed before five years have passed since the end of the year the account was opened: With the additional caveat that, in the event of early closure of the account, interest will be permitted at a rate that will be one percent less than the interest that has been periodically credited to the account since the account's opening date, or, if applicable, its extension date.

How to withdraw the PPF amount?

You can take the steps listed below to make an online PPF withdrawal:

Step 1: Visit the website of the bank or post office where you started your account to access your PPF.
Step 2: After logging in, choose the amount you want to withdraw by going to the "Withdrawal" or "Partial Withdrawal" area.
Step 3: Type in the information about your bank account, such as the account number and IFSC code, where you want the money that was taken out to be credited.
Step 4: Send in your withdrawal request and watch for approval.
Step 5: The money will be credited to your bank account as soon as the withdrawal is completed.

It should be noted that before completing the withdrawal request, some banks or post offices might need more information or confirmation while accepting the PPF withdrawal form.

You may also like; PPF Calculator – Why & How to Use it?

If a subscriber wants to close their account early, they need to send in a completed Form-5 along with the required paperwork. The bank or the post office will close the account and transfer the funds to the account holder's savings bank account or issue a demand deposit (DD) after the necessary documentation is submitted, such as medical reports attesting to the severity of the illness, records, and bills verifying admission to an accredited educational institution, a copy of the passport, verified income tax returns (ITRs), etc.

FAQs

Q. Can I withdraw the PPF amount online?

- No, currently, it is not possible to withdraw your PPF amount online.

Q. How can I exit PPF early?

- Only five financial years after a PPF account is opened is it permissible to close it early. It is only permitted in three situations: the account holder's health, education, and death.

Q. What happens to PPF after 15 years?

- After 15 years, an account holder may withdraw their entire balance in the PPF account, including any interest that has accumulated, and end the account at any time.

Q. Is PPF withdrawal taxable?

- Section 80C of the Income Tax Act, 1961 exempts partial or entire withdrawals from PPF from taxation.

Q. Can I withdraw 100% from PPF?

The entire amount from the PPF account can only be withdrawn after the completion of 15 years.

Q. Can I close PPF after 5 years?

Yes, you can close your PPF account after it attains the age of 5 years.

Q. Can I have 2 PPF accounts?

- No, multiple PPF accounts are not allowed for one individual.

Q. What happens if I put more than 150000 in PPF?

- You are limited to investing Rs. 1.5 lakh in your PPF account within a financial year. Above that amount, no earning interest will be paid and no deductions under Section 80C of the Income Tax Act, 1961 would be allowed.

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