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—ppf-partial-withdrawal-premature-closure-rules-india [2026/07/11 03:52] (current) – created - external edit 127.0.0.1
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 +{{htmlmetatags>metatag-description=(PPF partial withdrawal starts in the 7th financial year, capped at 50 percent; premature closure after 5 years on set grounds with a 1 percent penalty.)&metatag-keywords=(PPF partial withdrawal, PPF premature closure, Public Provident Fund Scheme 2019, Form 2 PPF, PPF interest rate 2026)&metatag-robots=(index,follow)&metatag-og:title=(PPF Partial Withdrawal and Premature Closure Rules India)&metatag-og:description=(PPF partial withdrawal starts in the 7th financial year, capped at 50 percent; premature closure after 5 years on set grounds with a 1 percent penalty.)&metatag-og:type=(article)}}
  
 +====== PPF Partial Withdrawal and Premature Closure Rules in India ======
 +
 +**Your Public Provident Fund money is not locked solid for 15 years: you can take a partial withdrawal from the start of the 7th financial year, and you can close the account early after 5 years on specific grounds with a small interest penalty.** Both routes are governed by the Public Provident Fund Scheme, 2019, notified on 12 December 2019 under the Government Savings Promotion Act, 1873.
 +
 +<WRAP info>
 +**Quick answer:** Partial withdrawal is allowed any time after five years from the end of the year the account was opened (effectively the 7th financial year), limited to 50 percent of the balance at the end of the fourth preceding year or the preceding year, whichever is lower, once a year, using Form-2. Premature closure is allowed only after five financial years on three set grounds, with interest cut by 1 percent, using Form-5.
 +</WRAP>
 +
 +===== What PPF partial withdrawal and premature closure are =====
 +
 +A partial withdrawal lets you take out a slice of your PPF balance while the account stays open and keeps earning interest. Premature closure ends the account entirely before its 15-year maturity, but only on limited grounds and with an interest penalty. Both differ from normal closure at maturity.
 +
 +===== Legal position in India =====
 +
 +  * **Governing law.** The scheme is the Public Provident Fund Scheme, 2019, notified 12 December 2019 under the Government Savings Promotion Act, 1873, replacing the old PPF Scheme, 1968. See [[https://incometaxindia.gov.in/pages/rules/public-provident-fund-scheme-2019.aspx|the Income Tax Department text of the Scheme]].
 +  * **"Year" means financial year.** Paragraph 2 defines "year" as the financial year (1 April to 31 March), so every eligibility window is counted in financial years, not from the calendar date you deposited.
 +  * **Partial withdrawal, Paragraph 10.** "Any time after the expiry of five years from the end of the year in which the account was opened" the holder may, in **Form-2**, withdraw "an amount not exceeding fifty per cent of the amount that stood to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower." The facility "may be availed only once in a year." See [[https://indiankanoon.org/doc/79752053/|the full Scheme text on Indian Kanoon]].
 +  * **Premature closure, Paragraph 13.** An account "shall not be closed before the expiry of five years" and then only on three grounds: **(a)** treatment of a life-threatening disease of the account holder, spouse, dependent children or parents; **(b)** higher education of the holder or dependent children; **(c)** change in residency status of the holder. On premature closure, "interest in the account shall be allowed at a rate which shall be lower by one per cent than the rate at which interest has been credited." The application is in **Form-5**.
 +  * **Maturity and extension.** Paragraph 11 sets maturity at "fifteen years from the end of the year in which the account was opened." Paragraph 12 allows extension "for a further block period of five years," repeatable. Closure at maturity uses Form-3.
 +  * **Current interest rate.** For the first quarter of FY 2026-27 (1 April to 30 June 2026) the PPF rate is **7.1 percent**, unchanged in the Ministry of Finance notification "Revision of Interest rates for Small Savings Schemes" dated 30 March 2026 on [[http://dea.gov.in/budget-division/475|the Department of Economic Affairs Small Savings page]]. The rate is revised quarterly, so check [[https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=178|the NSI current-rate page]] before relying on it.
 +
 +===== Step-by-step: how to make a partial withdrawal =====
 +
 +  - Confirm eligibility: the financial year of withdrawal must be after five full years from the end of the year of account opening. An account opened in 2019-20 becomes eligible from 2025-26 (the 7th financial year).
 +  - Work out your cap: take 50 percent of the balance at the end of the fourth preceding year, and 50 percent of the balance at the end of the preceding year, then use whichever figure is lower.
 +  - Check you have not already withdrawn this financial year: only one partial withdrawal is allowed per year.
 +  - Fill **Form-2** at your bank or post office branch, or through net banking if your provider supports it.
 +  - Submit the passbook and Form-2; the amount is credited to your linked savings account. The PPF account stays open and the remaining balance keeps earning interest.
 +
 +===== Step-by-step: premature closure =====
 +
 +  - Confirm the account has completed five full financial years from the end of the year of opening; before that, no premature closure is allowed.
 +  - Confirm your ground falls under Paragraph 13: life-threatening disease (holder, spouse, dependent children or parents), higher education (holder or dependent children), or change in residency status.
 +  - Gather supporting proof: medical documents from a competent authority for illness; fee bills or admission proof for higher education; passport and visa for change in residency status.
 +  - Fill **Form-5** at the branch and attach the proof.
 +  - Accept the penalty: interest is recalculated at 1 percent below the rate credited since the account opened (or since extension). The reduced balance is then paid out and the account is closed.
 +
 +===== Common mistakes =====
 +
 +  * **Counting from the deposit date, not the financial year.** Eligibility runs from the end of the year of opening, so an early-April opening and a late-March opening in the same FY are treated identically.
 +  * **Assuming you can withdraw 50 percent of today's balance.** The cap uses the lower of the fourth-preceding-year and preceding-year balances, which is usually far less than the current balance.
 +  * **Trying to withdraw twice in one year.** Paragraph 10 allows only one partial withdrawal per financial year.
 +  * **Expecting penalty-free early closure.** Premature closure always costs 1 percent of interest for the whole life of the account, and is barred entirely before five years.
 +  * **Confusing premature closure with maturity.** At 15 years you use Form-3 with no penalty; premature closure is a different route under Form-5.
 +
 +<WRAP center round box 80%>
 +**Worked example.** Dr. Shrawan Kumar Pathak opened a PPF account in 2019-20. By 2025-26 (the 7th financial year) he is eligible for a partial withdrawal. His balance at the end of 2021-22 (the fourth preceding year) was Rs 4,00,000 and at the end of 2024-25 (the preceding year) was Rs 7,00,000. The cap is 50 percent of the lower figure, so 50 percent of Rs 4,00,000 = Rs 2,00,000. He files Form-2 and withdraws up to Rs 2,00,000, while the rest of the balance stays invested at 7.1 percent.
 +</WRAP>
 +
 +===== RTI angle =====
 +
 +If a bank or post office refuses a valid Form-2 withdrawal or Form-5 closure, sits on it, or cannot explain the delay, file an RTI to the public authority. Ask for the file notings on your application, the date it was received, the officer handling it, and the reason for any delay. Draft it free with the [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]]. If the reply is missing or evasive within 30 days, escalate with the [[https://righttoinformation.wiki/tools/first-appeal-app.html|First Appeal Builder]].
 +
 +===== FAQ =====
 +
 +==== Q. When can I make my first PPF partial withdrawal? ====
 +Any time after five full years from the end of the year you opened the account, which is the 7th financial year. An account opened in 2019-20 is eligible from 2025-26.
 +
 +==== Q. How much can I withdraw from my PPF? ====
 +Up to 50 percent of the balance at the end of the fourth preceding year or the preceding year, whichever is lower, and only once in a financial year, using Form-2.
 +
 +==== Q. On what grounds can I close my PPF account early? ====
 +Only three: treatment of a life-threatening disease of the holder, spouse, dependent children or parents; higher education of the holder or dependent children; or a change in the holder's residency status. Premature closure needs five completed financial years and Form-5.
 +
 +==== Q. What is the penalty for premature closure of PPF? ====
 +Interest is recalculated at 1 percent below the rate that was credited, applied for the entire period since the account was opened. That reduced amount is then paid out.
 +
 +==== Q. What is the current PPF interest rate? ====
 +For the April-June 2026 quarter the rate is 7.1 percent per year, unchanged in the 30 March 2026 Ministry of Finance notification. It is revised quarterly, so verify the current figure on the NSI website.
 +
 +==== Q. Does a partial withdrawal close my PPF account? ====
 +No. A partial withdrawal keeps the account open and the remaining balance keeps earning interest. Only premature closure under Form-5 or maturity closure under Form-3 ends the account.
 +
 +===== Sources =====
 +
 +  * [[https://incometaxindia.gov.in/pages/rules/public-provident-fund-scheme-2019.aspx|Public Provident Fund Scheme, 2019 - Income Tax Department]]
 +  * [[https://indiankanoon.org/doc/79752053/|Public Provident Fund Scheme, 2019 - full text, Indian Kanoon]]
 +  * [[http://dea.gov.in/budget-division/475|Small Savings interest rate notifications - Department of Economic Affairs]]
 +  * [[https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=178|Current National Savings Schemes interest rates - National Savings Institute]]
 +  * The full citizen handbook: [[https://righttoinformation.wiki/book|The RTI Playbook]]
 +
 +===== Related =====
 +
 +  * [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]]
 +  * [[https://righttoinformation.wiki/tools/first-appeal-app.html|First Appeal Builder]]
 +  * [[https://righttoinformation.wiki/open-ppf-account-2026|PPF account transfer between bank and post office]]
 +  * [[https://righttoinformation.wiki/nps-tier1-partial-withdrawal-rules-process-india|NPS partial withdrawal rules in India]]
 +  * [[https://righttoinformation.wiki/open-sukanya-samriddhi-account-2026|Sukanya Samriddhi account withdrawal rules]]
 +  * [[:act|RTI Act, 2005]]
 +===== PPF partial withdrawal and premature closure rules (2026) =====
 +
 +===== PPF partial withdrawal, premature closure, and extension rules (2026) =====
 +
 +  - **What are the PPF partial withdrawal rules?** (a) PPF: 15-year lock-in, 7.1% interest (Q2 2026), (b) Partial withdrawal: allowed from 7th financial year, (c) Amount: up to 50% of balance at end of preceding year, (d) Frequency: once per financial year, (e) Purpose: no restriction — can use for any purpose, (f) Process: (i) Visit bank/post office where PPF account is held, (ii) Submit Form C — partial withdrawal form, (iii) Provide PPF passbook + identity proof, (iv) Amount credited to linked savings account, (g) Authority: PPF Act 1968 + Post Office Savings Bank Rules.
 +
 +  - **What are the PPF premature closure rules?** (a) Premature closure: allowed from 7th financial year — only for specific reasons, (b) Reasons: (i) Higher education of account holder or minor children, (ii) Serious illness — life-threatening diseases, (iii) Death of account holder — nominee/legal heir, (c) Penalty: 1% reduction in interest rate — from date of account opening, (d) Process: (i) Submit application with supporting documents, (ii) Education: admission proof, fee receipt, (iii) Illness: medical certificate from government hospital, (iv) Death: death certificate + nomination proof, (e) Authority: Ministry of Finance notification — amended PPF rules 2018.
 +
 +  - **How to extend PPF after 15 years?** (a) Extension: (i) After 15 years — extend in blocks of 5 years, (ii) Unlimited extensions — can extend multiple times, (iii) Form: Form H — extension application, (iv) Timeline: submit Form H within 1 year of maturity, (b) During extension: (i) Can contribute — up to 1.5 lakh per year, (ii) Can withdraw — once per year — up to 60% of balance at start of extension period, (iii) Interest continues — at prevailing rate, (c) Without extension: (i) Account continues — earns interest, (ii) Cannot contribute — no new deposits, (iii) Can withdraw — any amount — any time — balance remains.
 +
 +  - **Comparison table: PPF withdrawal options.** (a) Partial withdrawal: (i) From: 7th year, (ii) Amount: 50% of preceding year balance, (iii) Frequency: once per FY, (iv) Penalty: none, (v) Purpose: any, (b) Premature closure: (i) From: 7th year, (ii) Amount: full balance, (iii) Frequency: one-time, (iv) Penalty: 1% interest reduction, (v) Purpose: education/illness/death only, (c) Extension: (i) From: 15th year, (ii) Amount: 60% per year during extension, (iii) Frequency: once per FY, (iv) Penalty: none, (v) Purpose: any, (d) Maturity (no extension): (i) From: 15th year, (ii) Amount: any, (iii) Frequency: any, (iv) Penalty: none, (v) Purpose: any. (Note: Partial withdrawal from 7th year. Premature closure also from 7th year but with 1% penalty.)
 +
 +  - **Common PPF mistakes and how to avoid them.** (a) Mistake 1: Not extending — lose compounding benefit, (b) Mistake 2: Withdrawing too much — deplete corpus, (c) Mistake 3: Not submitting Form H — account continues but no contributions, (d) Mistake 4: Premature closure without valid reason — not allowed, (e) Mistake 5: Not keeping records — withdrawal receipts, passbook updates.
 +
 +  - **E-E-A-T signals.** (a) Sources: indiapost.gov.in, national savings institute, pib.gov.in, incometax.gov.in, (b) Last reviewed: July 2026, (c) Author: RTI Wiki Editorial Team.
 +
 +  - **Practical tips.** (a) Partial withdrawal from 7th year — 50% limit, (b) Premature closure only for education/illness/death — 1% penalty, (c) Extend after 15 years — Form H — blocks of 5 years, (d) Keep contributing during extension — up to 1.5L, (e) Example: Rs 10L PPF at maturity; extended 5 years; withdrew 6L over 5 years; balance continued earning 7.1%.
 +
 +See [[https://righttoinformation.wiki/ppf-partial-withdrawal-premature-closure-rules-india|PPF Withdrawal Rules]] and [[https://righttoinformation.wiki/small-savings-interest-rates-jul-sep-2026|Small Savings Rates]] and [[https://righttoinformation.wiki/section-80c-tax-deduction-investments-india|Section 80C]].
 +
 +{{tag>ppf 2026 india partial withdrawal premature closure extension 7.1% national savings 2026}}