Why PPF is a Popular Choice
The Public Provident Fund (PPF) is a favorite savings plan in India because it’s safe, gives good returns, and saves tax. Started in 1968 by the government, it helps people save for big goals like retirement, a house, or kids’ education. The money you put in, the interest you earn, and what you take out are all tax-free under Section 80C. But the rules for taking money out can be tricky. Knowing when and how much you can withdraw in 2025 will help you plan better and avoid surprises.
When Can You Withdraw Money
PPF has a 15-year lock-in period, so you can’t take out all your money before that. After 15 years, you can withdraw everything, including the interest, without any penalty. For example, if you started your account in 2010, it matures in April 2026. If you need money sooner, you can take out some after 6 financial years. You can also close the account early after 5 years, but only for special reasons like medical emergencies or education needs, and you’ll lose 1% of the interest earned.
Partial Withdrawal Rules
After 6 financial years, you can take out up to 50% of the balance from the end of the 4th year or the previous year, whichever is lower. Only one withdrawal is allowed per year. For instance, if you opened your account in 2018 and by 2022 your balance was ₹5 lakh, you can withdraw up to ₹2.5 lakh in 2024. To do this, you need to fill Form C and submit it with your PPF passbook at your bank or post office. The money goes to your bank account after approval, and it’s tax-free.
| Withdrawal Type | Eligibility | Limit | Conditions |
|---|---|---|---|
| Partial Withdrawal | After 6 financial years | 50% of balance at end of 4th year or previous year | One withdrawal per year, Form C required |
| Full Withdrawal | After 15 years | 100% of balance | No penalty, Form 2 required |
| Premature Closure | After 5 years | Full balance | 1% interest penalty, valid reason needed |
Premature Closure for Urgent Needs
If you face a big problem like a serious illness or need money for higher education, you can close your PPF account after 5 years. You’ll need to show proof, like medical reports or college admission papers. The catch is that your interest rate drops by 1%. So, if the PPF rate is 7.1%, you’ll get 6.1% on your savings. This option is helpful but reduces your earnings, so think carefully before closing early. Submit Form C with documents to your bank or post office to start the process.
Extending Your PPF Account
Once your PPF matures after 15 years, you have three choices: take all the money, keep the account open without adding more, or extend it for 5 more years with new deposits. To extend with deposits, submit Form H before the maturity year ends. If you extend without deposits, you can still take out up to 60% of the balance at the start of the extension, but only once per year. For example, if your balance is ₹20 lakh in 2025, you can withdraw ₹12 lakh over 5 years. This lets your savings grow with interest.
How to Make Withdrawals Easy
To withdraw money, visit your bank or post office, fill out the right form (Form C for partial or premature, Form 2 for full), and give your PPF passbook. Make sure your bank details are correct for the money transfer. For premature closure, include proof of your reason. Always check your balance and plan withdrawals to avoid penalties. If you don’t need the cash, keeping the account open or extending it can grow your savings more. PPF is a great way to save, but knowing these rules helps you get the most out of it.