Money can be withdrawn from the Public Provident Fund (PPF) even before the maturity of 15 years. Know under which special circumstances this is possible, what are its terms, conditions and tax related provisions. Complete information about PPF pre-mature withdrawal for children's education, serious illness or other needs.

You have opened PPF, money is getting accumulated well, tax is also being saved... but this is a 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 15-year lock-in period 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. Let us, today in this "Kaam Ki Baat" we 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 it is not known when and 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 Can PPF money be withdrawn before 15 years? (PPF Withdrawal Before 15 Years)

You can get premature closure or partial withdrawal done under certain special circumstances after completion of 5 financial years of opening your PPF account. 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 given 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 has to be provided).

Change of residence (becoming an NRI): If the account holder is permanently settling abroad or his citizenship has changed.

What about pre-mature closure?

On pre-mature 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 the withdrawal (whichever is less).

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 this.

No lock-in: The first 6 financial years are completely locked-in, that is, you cannot withdraw any money in these 6 years (you can take a loan, which will be discussed later).

4. Loan Facility on PPF

If you need money before 5-6 years, then 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 just before 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? 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. Your existing balance will continue to earn interest.

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 considered. 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 just important to understand these terms and conditions well so that you can take the right decision at the right time.

Disclaimer

This information is for informational and educational purposes only and should not be considered as financial advice. The rules and interest rates related to PPF are changed by the Government of India from time to time. Check the official rules before making any investment or withdrawal decision and consult your financial advisor if necessary.