PPF Withdrawal & Premature Closure Rules Explained
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How to deal with a PPF account upon maturity?
You have three options when it comes to withdrawal (after 15 years):
Complete withdrawal upon maturity: At the end of the 15th year, you can close your PPF account and withdraw your deposits. To close your PPF account, fill out Form C and submit it to the post office or bank where you have opened or maintained the account.
Extend PPF account without contributions: You can leave it open for as long as you want without making any new contributions in case you don’t want to close your account. Interest will continue to be paid on the balance until it is closed. Each financial year, you are granted one withdrawal. However, there is no cap on the withdrawal amount.
Extend PPF account with contributions: If you wish to keep your account open and keep on making contributions, you can opt for a 5-year extension. You have the option of keeping the account open with or without contributions after the maturity period of 15 years. If you want to extend the term of your PPF account, you must apply Form 15 H within one year of the account’s maturity period. During the 5-year extended term period, you are granted one withdrawal each year, and you cannot withdraw more than 60% of the gross amount. Deposits made after maturity will not generate interest and will not be eligible for deductions under Section 80C of the Income Tax Act if you choose to make deposits without submitting Form H.
Premature PF withdrawal rules
Only certain conditions allow you to close your PPF account early after 5 years of account opening. Here are few clear conditions to know when you can close your account early:
Until five years have passed from the end of the year in which the initial contribution was made, premature withdrawals are permitted.
One can withdraw only once per financial year.
You won’t be able to withdraw the whole balance out of your PPF account. The maximum amount is 50 percent of the balance at the end of the fourth financial year or 50 percent of the balance at the end of the preceding year, whichever is lower.
To withdraw the partial amount from the PPF account, you must fill out Form C and submit it at your concerned bank or post office.
PPF premature closure rules
Only after 5 financial years from the account was opened one can close his or her account prematurely. It is only permitted for conditions which are as follows:
- The PPF account can be closed if the account holder, his or her spouse, parents, or minor children are hospitalized with a critical illness.
- For higher education of his or her children one can also apply for premature close of the PPF account.
- You can close your PPF account prematurely if your resident profile has changed.
- In the event that a PPF account is prematurely closed, the account holder receives 1% less interest than the current rate.
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