New Delhi: The Public Provident Fund or PPF account although has a lock-in of 15 years, it provides loan and partial withdrawal facility before the end of tenure. While a loan from PPF account can be availed between the third and sixth financial year of opening the PPF account, partial withdrawal facility from PPF is allowed from the seventh year onwards. A PPF account holder also has the option to prematurely close the account after completing five years for reasons like higher education or medical treatment.
Here are five things you need to know about partial withdrawal from PPF
1) After the completion of the sixth financial year or from the beginning of the seventh financial year, you will be eligible for partial withdrawal from your PPF account. You can make maximum one partial withdrawal in a year
2) The maximum partial withdrawal amount is capped at 50% of the account balance at the end of the fourth financial year or 50% of the account balance at the end of the previous financial year, whichever is lower.
3) Partial withdrawals from PPF account.is not taxable
4) PPF subscribers have an option to retain their PPF account even after the maturity without making any further contributions. In this case, the amount accumulated in the account continues to get interest till it is closed. Also, the subscriber can make one partial withdrawal of any amount in each financial year.
5) If you decide to continue contributing to your PPF account after maturity, then it can be extended by a block of five years for unlimited times. But the partial withdrawal rule changes during this extended maturity period. The PPF subscriber can make one withdrawal in a year during this extended maturity but the total withdrawal amount in a block (during the entire five year period) should not cross 60% of the balance in the account at the commencement of each block.
For example at the end of the 15 years, your PPF account balance is Rs 10 lakh. If you decide to extend your account by another five years then the maximum partial withdrawal that you can make during the five year period is Rs 6 lakh.
How to make partial withdrawals from PPF account
For partial withdrawals, you need to visit your post office or bank branch where you have the PPF account and submit a filled-in Form C. In Form C, you need to give details such as account number, amount of money to be withdrawn, etc. If the PPF account is in the name of a minor, then there should be an additional declaration stating that the amount is required for the use of a minor child who is still a minor and is alive.