The Public Provident Fund (PPF) is a government-backed long-term savings scheme with a standard maturity period of 15 years. Unlike a regular savings account, PPF comes with specific rules governing withdrawals, premature closure and account extensions.
However, investors do have the option to access part of their savings before maturity, subject to certain conditions. The withdrawal rules depend on the date the account was opened and the applicable PPF balance.
When Can You Withdraw Money From PPF?
Partial withdrawal from a PPF account is permitted from the 7th financial year, provided at least five years have passed from the end of the financial year in which the account was opened.
Only one partial withdrawal is allowed in a financial year. The maximum amount that can be withdrawn is 50% of the lower of two applicable balances: the balance at the end of the financial year immediately preceding the withdrawal year or the balance at the end of the fourth financial year before the withdrawal year.
This means the withdrawal amount is not simply calculated on the current PPF balance. The prescribed balance calculation determines the maximum amount that can be taken out.
PPF is primarily designed for long-term savings rather than regular day-to-day expenses. However, the partial withdrawal facility can provide financial support when funds are required during an emergency.
What Happens After 15 Years?
A PPF account normally matures after 15 years, calculated from the end of the financial year in which the account was opened. Once the maturity period is completed, the account holder can withdraw the entire accumulated balance along with the interest earned.
There is no compulsory requirement to withdraw the money immediately after maturity. The account holder can choose to continue holding the PPF account.
There are two options after maturity. The account can be continued without making additional deposits, allowing the existing balance to continue earning interest. Alternatively, the account can be extended for further investment in blocks of five years.
Rules for Premature Closure of PPF
Complete withdrawal before maturity is generally not permitted. However, premature closure of a PPF account can be allowed after five years in certain situations, including treatment for a serious illness, higher education and cases where the account holder becomes an NRI.
When an account is closed prematurely under the permitted conditions, there is a 1% reduction in the interest applicable to the account.
In the event of the account holder’s death, the nominee or legal heir can claim the balance and accumulated interest without waiting for the 15-year maturity period.
PPF remains a long-term savings option, but its partial withdrawal and premature closure provisions provide account holders with access to their funds under specified circumstances.
Disclaimer
This article is intended for general informational purposes only. PPF rules, eligibility conditions and applicable provisions may be subject to changes by the relevant authorities. Readers should verify the latest rules and conditions with the concerned government authority or financial institution before making any financial decision.