The Public Provident Fund (PPF) in India is one of the popular government-backed savings schemes that offers attractive interest rates and tax benefits. Being a long-term investment with a maturity period of 15 years, it serves well in the creation of wealth. But then, in case of withdrawal before 15 years, many investors wonder, ‘What if an emergency crops up can I shut the PPF account beforehand?’ Let us discuss the withdrawal and premature closure rules.
Partial Withdrawal: When & How Much Can You Withdraw?
Though PPF is a long-term saving scheme, the government allows partial withdrawals under specific conditions. Partial withdrawals from the PPF account may be initiated after the completion of five financial years, which means withdrawals are allowed only after the completion of the sixth year.
The maximum amount that can be withdrawn is 50% of the balance in the PPF account at the end of the fourth financial year immediately preceding the year of withdrawal or 50% of the balance as of the end of the previous financial year, whichever figure is lower. For instance, if an investor has opened a PPF account on February 1, 2020, he will be eligible for partial withdrawal from the financial year 2025-26.
Can You Close a PPF Account Before 15 Years?
Yes. Early closure of the PPF account is allowed under certain conditions set by the government, provided at least five years have passed. However, interest will be deducted at the rate of 1% on the total amount before returning the money to the account holder.
Situations Where You Can Close Your PPF Account Early
If there is a medical emergency that requires the urgent treatment of the account holder or an immediate family member, then premature closure is allowed after five years. Medical papers from an authorized authority will be required as evidence.
If funds are to be used for the higher education of the child, the account can be closed after five years, if the investor submits proof like an admission letter, fee receipts, or other relevant documents to support this.
If the account holder is permanently moving abroad for a job, residency, or citizenship, closure before the maturity of the PPF account will be possible. Here, visa documents job offer proofs, or residency proofs would need to be presented for verification.
On account of the demise of the account holder, the said PPF account would be closed before the maturity period, and the entire balance would be transferred to the nominee or legal heir, where this five-year rule will also stand waived.
How to Apply for a Premature Closure of PPF Account
If an investor meets all the conditions of early closure, then he/she will have to visit the bank or post office with the PPF account and will have to submit a written request stating reasons for closure. The concerned authorities must also be provided with relevant supporting documents like medical reports, admission letters, visa papers, or a death certificate in case of one’s demise.
For verification, a copy of the PPF passbook should also be attached. After considering the documents, the request will be processed by the bank or post office after applying the 1% penalty on the amount that shall then be paid back into the bank account of the account holder.
Conclusion
PPF is indeed a long-term investment which, however, secures the investor financially. Nothing is certain, however. Withdrawing money early or premature closure is an option; the government allows it in various situations, though strongly disfigured. If you are thinking about PPF investments or you currently have one, make sure you educate yourself on these rules for your financial well-being.