Complete guide on how to make early PPF withdrawals

Complete guide on how to make early PPF withdrawals before the 15-year maturity period

PPF Withdrawal Rules: Early, Partial, and Premature

 Partial Withdrawal (After 6 Years)

• When allowed: From the 7th financial year onwards.

• Limit: Up to 50% of the balance at the end of the 4th year preceding the withdrawal year, or 50% of the balance at the end of the immediate preceding year — whichever is lower.

• Frequency: Only once per financial year.

• Form Required: Form C.

2. Premature Closure (After 5 Years)

• When allowed: After completing 5 financial years, only under specific conditions:

  • Serious illness of the account holder or dependents.

  • Higher education of the account holder or dependents.

  • Change in residency status (i.e., becoming an NRI).

• Penalty: Interest will be paid 1% less than the applicable interest rate for each year.

• Form Required: Form for Premature Closure of PPF Account + proof of reason (e.g., medical or education documents).

Full Withdrawal (After 15 Years)

• When allowed: On maturity, i.e., after completing 15 full financial years from the end of the year the account was opened.

• Action: Withdraw full balance without any tax liability.

• Option: You may choose to extend the account in blocks of 5 years with or without further contributions.

• Tax Status: PPF falls under EEE (Exempt-Exempt-Exempt) category — contributions, interest earned, and maturity proceeds are all tax-free.

• NRI Status: NRIs cannot open a new PPF account. If a resident becomes an NRI, the account can be maintained till maturity but cannot be extended.

Documents Needed for Withdrawal:

• Duly filled Form C (for partial withdrawal) or Premature Closure form.

• Passbook or statement of account.

• ID proof and supporting documents if required (for premature closure).

Loan Against PPF

• Eligibility: Allowed after 1 full financial year from the end of the FY in which the account was opened. and Can be availed before the expiry of 5 full FYs.

• Loan Amount: Up to 25% of the balance at the end of the 2nd FY preceding the year of loan application.

• Example:

  • Loan applied on 31 March 2025

  • Year to consider: 31 March 2023

  • Balance: ₹4.5 lakh

  • Max Loan = 25% = ₹1.12 lakh

• Repayment Terms:

  • Max 36 months

  • Interest = PPF rate + 1%

Partial Withdrawals of PPF

• Eligibility: After completion of 5 full financial years from the end of FY in which the account was opened.

• Withdrawal Limit: Lower of 50% of Balance at end of 4th FY preceding the year of withdrawal, or Balance at end of FY preceding the year of withdrawal.

• Example:

  • Withdrawal on 31 March 2025

  • Balance on:

    • 31 Mar 2021 (4th FY preceding): INR 4 lakh → 50% = INR 2 lakh

    • 31 Mar 2024 (preceding FY): INR 5 lakh → 50% = INR 2.5 lakh

  • Withdrawal allowed = INR 2 lakh (lower of the two)

Key Differences Between Loan vs Partial Withdrawal

How to Apply PPF Withdrawal

• Visit your bank/post office branch where PPF is held.

• Submit Form D (for loan) or Form C (for withdrawal) along with:

  • Passbook copy

  • ID proof

  • Reason (in some cases)

• Some banks offer online applications for PPF loan/withdrawal.