The Public Provident Fund or PPF account has a maturity period 15 years but it allows partial withdrawal before the end of tenure. A PPF account can be closed prematurely before 15 years but only under specific circumstances. A PPF subscriber can prematurely close the scheme after completing five years for specific reasons such as higher education or expenditure towards medical treatment. But premature closure of the account attracts a penalty—a subscriber will get 1% less interest. On the other hand, if a subscriber wishes to, a PPF account can be extended beyond 15 years. Currently, the deposit scheme offers an interest rate of 7.6%.
PPF partial withdrawal rules
1) Starting from the seventh year, a PPF account holder can make one partial withdrawal every year.
2) The withdrawal is capped at 50% of the total balance at the end of the fourth year immediately preceding the year of withdrawal or the year immediately preceding the year of withdrawal, whichever is lower.
3) Partial withdrawals from PPF are tax free, say tax experts.
4) A PPF subscriber can retain his PPF account after maturity (15 years) without making any further deposits. The balance in the account continues to earn interest till it is closed. The subscriber is allowed to make one withdrawal of any amount in each financial year.
5) If a subscriber wants to make further contributions after the PPF account matures, it can be extended in blocks of five years. During each block period, the account holder can make one withdrawal not exceeding 60% of the balance at the commencement of each block. This amount can be withdrawn either in one or more installments in different years, not exceeding one withdrawal a year.