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Public Provident Fund: Know when you can do partial withdrawals, what is the way to close your account prematurely


Public Provident Fund (PPF) Savings Scheme is a better investment tool that gives investors a chance to make money on long term investments. Interest on PPF schemes is paid by the government every quarter. In the first quarter of FY 2021, the interest rate on PPF was fixed at 7.1% from April 1 to June 31. PPF has a maturity of 15 years but investors are allowed to make partial withdrawals. An investor may also request premature closure in certain situations.

Partial clearance and closure: Withdrawals can generally be made after a maturity period of 15 years from the date of account opening. However, partial withdrawal can be done at the end of the 6th year from the date of account opening. An investor can choose to prematurely close a PPF account for medical emergency or educational needs.

PPF investors are allowed to withdraw from the beginning of the seventh financial year every year. This withdrawal may be less of the following.

Premature closing: PPF account can be closed before maturity date. The PPF account is allowed to be closed after five years from the end of that year, before the maturity date or time. However, premature closure is allowed only when the investor needs funds for treatment of diseases after showing proper documentation proving the medical condition.

On the other hand, if the investor or account holder requires money for higher education in a recognized institution in India or abroad, premature closure is allowed. PPF falls under the exempt-exempt-exempt (EEE) tax benefit category.

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