Learn How To Withdraw Your PPF Balance Before Maturity

Want to withdraw your PPF balance before maturity? Here's how you can do it.

<div class="paragraphs"><p>Image by Syed Hussaini on Unsplash</p></div>
Image by Syed Hussaini on Unsplash

The Public Provident Fund, also known as PPF, is one of the most risk-free savings/investment schemes in India that is backed by the Indian government. What makes the PPF so popular is the guaranteed returns and tax benefits that come along with it. However, it comes with a maturity period. But what if you don’t want to wait, or need the money for some emergency? In that case, PPF withdrawal before maturity is definitely possible.

First, let’s understand how a PPF account works.

A PPF account can be opened at a Bank or Post Office by any individual who wishes to invest and create long-term wealth for their future. Currently, this scheme comes with an interest rate of 7.10% per annum with effect from 01.04.2020.

A PPF account can be opened and maintained by investing a certain sum every year. Currently, the minimum amount needed to invest in PPF is ₹500, while the maximum limit per annum is ₹1.5 Lakh. Individuals can invest this sum in multiple instalments or all at once, as per their convenience.

However, if you’re wondering whether PPF is taxable, it’s not! It is completely tax-free. In fact, the amount you invest every year upto ₹1.5 Lakh is exempt from taxation under Sec 88 of the IT Act. Moreover, any interest that you earn in your PPF account is also tax-free. You also earn interest on interest, which yields more returns for the investor.

The PPF account comes with a maturity timeline of 15 years. This means you have to keep investing for the entire duration, whether it’s ₹500, ₹1.5 Lakh, or any amount in between. And once the maturity date is crossed, you can withdraw your entire corpus in one go. However, if you want to make a PPF withdrawal before maturity, you can do that as well.

Here are two ways you can get a PPF withdrawal before maturity:

  1. Get 50% of the balance via partial withdrawal.

  2. Get the full amount by premature closure of the PPF account.

Let’s get into the details to understand these points better.

Partial Withdrawal Of PPF Before Maturity

There are two ways through which you can get half of your savings from your PPF account:

  • Get 50% of the account balance calculated at the end of the financial year, preceding the current year.

  • Get 50% of the account balance calculated at the end of the 4th financial year, preceding the current year.

Whichever amount is the lowest of these two is the one you’ll get during your partial withdrawal. However, you can’t withdraw the amount until after the lock-in period i.e. 6 years. For example, if your PPF account was started in Jan 2021, you will be able to withdraw money in the financial year 2026-27.

Full Withdrawal of PPF Via Account Closure

This method can be applied only under certain scenarios. For example, if you need the money for medical reasons or the education/marriage of yourself or your child, then your PPF account can be prematurely closed. However, this can be done only after a span of 5 years since the day your PPF account was opened.

Steps For PPF Withdrawal Before Maturity

If you think you’re eligible for a partial PPF withdrawal, you can do it by following the steps mentioned below:

  1. Download the online form(Form C) for withdrawal from your bank’s website. You can also get it directly at your branch or post office.

  2. Fill it up and enclose it with a copy of your PPF passbook.

  3. Now submit this at your respective bank’s branch or post office.

You can also withdraw PPF balance online if you enjoy a net banking facility from your bank. However, if you wish to close your PPF account you also need to submit valid proof of the reason you’re giving for the premature closure.