Public Provident Fund: Here are PPF rules for partial withdrawal, premature closure

The Public Provident Fund (PPF) is one of the most popular savings instrument for generation of long term wealth offered by banks.

PPF allows to make partial withdrawals from the fund before completion of the maturity period of 15 years. In some situations, premature closure can be requested for by the PPF account holder.

Here are the rules for partial premature withdrawal:

You can withdraw partial sum from your PPF account after the expiry of five years from the end of the year in which the account was opened.

PPF allows one withdrawal every year, from the seventh financial year. The withdrawal amount will be lower of the following:

-50 percent of the balance at the end of the fourth financial year immediately preceding the year of withdrawal or

-50 percent of the balance at the end of the preceding year.

Premature closure of PPF Account

PPF account can be closed before maturity. Premature closure is allowed after five years from the end of the year in which the account was opened. 1 percent interest will be deducted from the date of account opening for premature withdrawal. PPF Account can be closed in the following circumstances:

- If the amount is required for the treatment of serious ailments or life threatening diseases of the account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority.

- If the amount is required for higher education of the account holder, on production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India & abroad.

- In case of change of resident status of account holder

Taxation on withdrawal from PPF

The withdrawals from PPF, either partial or in whole are exempt from taxation.