PPF withdrawal rules: partial, maturity and closure

PPF withdrawal rules at a glance

PPF partial withdrawal rules and the 50 percent limit

Partial withdrawal opens once five years have run since the opening financial year ended, which in practice means the seventh financial year. The amount you can take is up to half of whichever is lower: the closing figure of the fourth year before this one, or last year's closing figure.

• Only one withdrawal in a financial year.
• Any loan still unpaid, with interest, must be cleared first.
• A discontinued account (one where a year's minimum of 500 rupees was missed) gets no withdrawal until it is revived.
• For a child's account, the guardian signs a certificate that the money is for the child's use.

PPF maturity period and your three choices

The account matures when 15 full financial years have passed after the opening year closes. An account opened in, say, August is counted from the next 1 April, so the real time is a little over 15 years. At maturity you can:

1. Close it. Submit Form 3 with the passbook. You get the full balance with interest up to the end of the month before closure.
2. Keep it without deposits. Do nothing. The balance keeps earning the PPF rate, and you may make one withdrawal of any amount each year.
3. Extend it with deposits. Hand in Form 4 before a year passes from maturity to add a block of five years.

Once you have run an account without deposits for more than a year, you cannot switch back to the version with deposits.

PPF extension rules with deposits

The extension choice must reach the accounts office before one year from maturity. If you keep paying in without sending Form 4, those deposits are treated as irregular and refunded without interest. After you opt in, you cannot withdraw that request later.

During an extended block, withdrawals are still allowed, once a year or in one go, but the total for the five years cannot cross 60 percent of the opening balance of that block. The same rules repeat for each later block of five years, and at the end of any block you may stop deposits and simply let the account earn interest.

PPF premature closure: who qualifies

Early closure is barred until the account has lived through five financial years after its opening year. After that, Form 5 can be used on one of these grounds only:

• Treatment of a life threatening illness for the account holder, spouse, dependent children or parents, with medical reports from the treating authority.
• Higher education of the account holder or dependent children, with proof of admission and fee bills from a recognised institute in India or abroad.
• A change in the account holder's residency status, with a copy of the passport and visa or the income tax return.

On premature closure, the office reworks all interest at one point below each credited rate, so the payout is lower than the passbook balance.

How to submit a PPF withdrawal form, and online options

Many banks let customers request PPF withdrawal online through net banking once the account is eligible. For a post office account, ask the counter whether your request can be done through post office internet banking; otherwise the paper form is the route.

When the account holder dies

The account is closed and cannot be continued by the nominee or legal heir. The balance earns interest up to the end of the month before the payment is made. If a loan was outstanding, the interest due on it is adjusted from the final amount. The nominee files a claim at the accounts office with the death certificate and their own KYC papers; without a nomination, the legal heir route needs more documents and takes longer.