Sunday, 22 March 2015

Public Provident Fund (PPF) partial withdrawal rules

Though PPF is supposed to be a long term investment vehicle where the entire amount in the PPF account could be withdrawn only on maturity (i.e. After completion of 15 years. Read: What is the duration of PPF account?). However, in case of financial emergency subscriber may opt for partial withdrawals from his account subject to certain rules.

Eligibility for PPF partial withdrawal

When subscriber is eligible to withdraw can be explained in two ways, though they both mean the same thing.

  • Anytime after the expiry of five years from the end of the financial year in which the initial subscription is made, one withdrawal, once a year, is allowed.

    As Exp. An account opened in January 2010 will be eligible for partial withdrawal from April, 2015. To explain it further, as I said above - from the end of the financial year in which the initial subscription is made. If the account is opened in Jan, 2010 so the end of the financial year would be 31st Mar, 2010. Expiry of five years from the end of the financial year can be counted as -

    • Apr, 2010 – Mar, 2011.
    • Apr, 2011 – Mar, 2012.
    • Apr, 2012 – Mar, 2013.
    • Apr, 2013 – Mar, 2014.
    • Apr, 2014 – Mar, 2015.
    Thus partial withdrawal will be allowed from April, 2015.
  • The second way to say the same thing is one withdrawal, once a year, is allowed from the beginning of 7th year. If we take the same example where account is opened in January, 2010 the subscriber will be eligible for partial withdrawal from April, 2015. Since the account is opened in Jan, 2010 which means financial year 2009-2010. Now, if we count till the beginning of the seventh year that count will go like -
    • Apr, 2009 – Mar, 2010.
    • Apr, 2010 – Mar, 2011.
    • Apr, 2011 – Mar, 2012.
    • Apr, 2012 – Mar, 2013.
    • Apr, 2013 – Mar, 2014.
    • Apr, 2014 – Mar, 2015.

    So the beginning of the 7th year in this case would be Apr, 2015.

Amount that can be withdrawn

The amount that can be withdrawn is subject to the following rule -

Subscriber can withdraw an amount not exceeding the lower of:

  • 50% of the balance at the end of the 4th immediately preceding year.
  • 50% of the balance at the end of the immediately preceding year.

Lets's see it with an example -

For a partial withdrawal requested in April 2015, the amount of withdrawal will be limited to 50% of the lower of the balances standing to subscriber's credit as on -

  • March 31, 2012 (4th immediately preceding year).
  • March 31, 2015 (immediately preceding year).

Points to note -

  • PPF maturity duration is 15 years.
  • Pre-mature closure of a PPF account is permissible only in case of death.
  • Partial withdrawal is available from the starting of the 7th financial year after the initial subscription is made.
  • One withdrawal once a year is allowed.

That's all for this topic Public Provident Fund (PPF) partial withdrawal rules. If you have any doubt or any suggestions to make please drop a comment. Thanks!


Related Topics

  1. Tax exemption benefits of PPF
  2. Duration and maturity options of PPF account
  3. Procedure to take loan against PPF account
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4 comments:

  1. Hi There,

    Unfortunately my father passed away last month. He was holding PPF acount with bank of Baroda (Chandigarh), how can i claim the amount now as i am the nominee for the same. Also is there any form/affidavit format which i can download from net. i am unable to get the copy from bank.

    ReplyDelete
    Replies
    1. My condolences. If you are a nominee then you just need to produce the death certificate along with Form -G. You can print form G from here -- http://admis.hp.nic.in/himpol/Citizen/LawLib/Amendments/PPF_SCHEME/PPF%20Scheme.htm#A12

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  2. My ppf a/c matured on 31 march 2016. On 2 april, applied for exension. On 4 april, applied for partial withdrawal. SBI rejected. Pl. explain, why is it so.

    ReplyDelete
    Replies
    1. Its a very specific query so its hard to know what went wrong. You should talk to the concerned person in the Bank. It may be because of some wrong entry in the withdrawal form or may be the gap between applying for extension and then the partial withdrawal was very less and it wasn't updated till then ..
      To get more idea about the maturity options visit - http://frjfinance.blogspot.com/2015/04/ppf-duration-and-maturity-options.html

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