Categories: Financial Control

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

Feature Loan Against PPF Partial Withdrawal
Timing 3rd to 6th year After 6th year
Amount Limit 25% of 2nd FY prior balance 50% of lower balance (as explained)
Interest Cost PPF rate + 1% No interest
Repayment Mandatory, within 36 months Not required
Impact on PPF Temporary loan, repaid Permanent reduction in balance

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.

Tags: PPF
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Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

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