PPF Maturity, Partial Withdrawal and Premature Closure: What the Scheme Says

You opened a Public Provident Fund (PPF) account years ago. Now two questions keep coming up. Can I take some money out before the account matures? And when it does mature, is everything I receive free of tax?

This article answers the first question from the text of the scheme itself. For the second, it tells you what the law we could open says, and where you should ask a Chartered Accountant (CA) to confirm before you rely on it.

One caution first. The main scheme is the Public Provident Fund Scheme, 2019 (G.S.R. 915(E)), made under section 3A of the Government Savings Promotion Act, 1873. The notification of 7 November 2023 (G.S.R. 831(E)) records that the scheme was also amended by G.S.R. 290(E) dated 5 May 2020. This article is built on the 2019 scheme text and the 2023 amendment. The 2020 amendment was not available to us, so any figure or condition below may have been changed by it. Check the current scheme text with your bank or post office before you act.

Your situation: which "year" are we counting from?

Almost every timing rule in the scheme counts from "the end of the year in which the account was opened". The scheme defines "year" as the financial year (para 2(1)(f), Public Provident Fund Scheme, 2019).

So the date you opened the account within the year does not matter. What matters is the 31 March that closes that financial year.

Example: you opened the account in October 2012. That falls in the financial year 2012-13, which ends on 31 March 2013. Every "five years" and "fifteen years" below runs from 31 March 2013. This is only an illustration of how the counting works.

What you can do before maturity: partial withdrawal

Para 10(1) of the scheme allows a withdrawal from your balance. The words that matter are these:

• It is available "any time after the expiry of five years from the end of the year in which the account was opened".
• You apply in Form-2 to the accounts office (the bank or post office branch that holds your account).
• The amount cannot exceed "fifty per cent" of the lower of two balances: the balance at the end of the fourth year immediately before the year of withdrawal, or the balance at the end of the preceding year.

Read that last point slowly. You do not take 50% of today's balance. You take 50% of whichever of those two year-end balances is lower.

A made-up example, to show the arithmetic only: you want to withdraw in financial year 2026-27. The balance at the end of the fourth year before that (the end of 2022-23) was ₹4,00,000. The balance at the end of the preceding year (2025-26) was ₹6,00,000. The lower figure is ₹4,00,000, so the ceiling is ₹2,00,000.

Two conditions sit on this facility (para 10(1), provisos):

• If you have an outstanding loan on the account, you must pay it back with interest before you withdraw.
• A withdrawal can be taken only once in a year, and only from an account that has not become discontinued.

For an account held for a minor or a person of unsound mind, the guardian applies and gives the certificate set out in para 10(2).

What is a "discontinued" account?

Para 6(1) says an account is treated as discontinued if the holder, having made the initial-year minimum deposit, fails to deposit the minimum amount in the following years. A discontinued account can be revived during its maturity period on payment of a fee along with arrears of the minimum deposit for each year of default (para 6(2)). The fee and minimum amounts are set in the scheme text and may have been revised, so ask the accounts office for the current figures. Until it is revived, loan and partial withdrawal are not allowed (para 6(3), proviso).

If you skipped a year, fix that before you plan a withdrawal.

A loan is a different route

Para 8 of the 2019 scheme offers a loan, not a withdrawal, in the window after one year and before five years from the end of the year of the first deposit, capped at twenty-five per cent of the balance at the end of the second year before the application year (para 8(1)). Loan terms are among the points the 2020 amendment may have touched, so confirm them with your accounts office.

The deadline clock: maturity at fifteen years

Para 11(1) says that "any time after the expiry of fifteen years from the end of the year in which the account was opened", the holder may apply in Form-3 to close the account. The accounts office then allows withdrawal of "the entire balance along with due interest up to the last day of the month preceding the month in which the account is closed".

Continuing the example above: the account opened in 2012-13 reaches fifteen years on 31 March 2028. From then, you can apply to close it.

You have three choices at maturity. They are not alike, and the choice has a time limit.

Choice 1: close the account

Apply in Form-3 (para 11(1)). You receive the full balance and interest as described above.

Choice 2: keep the account, with no new deposits

Para 11(2) lets you retain the account after maturity for any period without making further deposits. The balance keeps earning interest at the rate applicable to the scheme. You may make one withdrawal in each year of any amount within the balance.

There is a one-way door here. Para 11(3) says that once you continue without deposits for more than a year, you cannot again choose to continue with deposits.

Choice 3: extend for five years and keep depositing

Para 12(1) lets you extend the account for a further block of five years and continue to deposit, by applying in Form-4. The option must be exercised "before expiry of one year from the maturity of the account" (para 12(2)).

If you miss that window, the consequence is spelled out in para 12(3): no deposits can be made, and any deposit that is made "shall be treated as irregular and refunded by the accounts office immediately without any interest". The balance on the maturity date still earns interest up to the end of the month before the month of closure.

Once you opt for the five-year extension, you cannot withdraw that request later (para 12(7)).

During an extended block, partial withdrawal is still available, but the total taken over the five-year block cannot exceed sixty per cent of the balance at the start of that block. It may be taken in one go or in yearly instalments (para 12(4)). If you extend with deposits and later want to stop depositing, you can leave the account without deposits after completing any block and take one withdrawal a year (para 12(6)).

Can I close earlier than fifteen years?

Yes, but only on stated grounds. Para 13(1) permits premature closure on an application in Form-5 on any of these grounds:

• treatment of a life-threatening disease of the account holder, spouse, dependent children or parents, with supporting documents and medical reports from the treating medical authority;
• higher education of the account holder or dependent children, with documents and fee bills confirming admission in a recognised institution of higher education in India or abroad;
• a change in the residency status of the account holder, with a copy of the passport and visa, or the income-tax return.

Two provisos follow (para 13, provisos):

• The account cannot be closed before five years from the end of the year in which it was opened.
• On premature closure, interest is allowed at a rate lower by one per cent than the rate credited from time to time since the date of opening. The 2023 amendment changed the end of the reference period in that second proviso. Where the old words said "or the date of extension of the account", they now say "or from the date of commencement of the current block period of five years" (G.S.R. 831(E), 7 November 2023).

In plain words: if you close early, you lose one percentage point of interest. For an extended account, the reduction is measured from the start of the current five-year block.

If you are an NRI wondering about the "change in residency status" ground, the point here is only that this ground exists in the scheme; whether you may keep or should close the account as an NRI is a separate question to settle with your CA.

Is the maturity amount tax-free?

We want to be careful here, because "PPF is tax-free" is repeated everywhere, and we do not repeat anything we have not opened.

What we could open:

• Under the Income-tax Act, 1961, section 10(11) exempts "any payment from a provident fund to which the Provident Funds Act, 1925 applies". The wording of the clause does not name the Public Provident Fund, and the clause may have been amended since, so we do not rely on it here.
• Under the Income-tax Act, 2025, the corresponding provision is item 3 of Schedule II. The mapping between the two Acts links section 10(11) of the 1961 Act to that item. It reads: "Any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies, or from any other provident fund set up by the Central Government and notified by it in this behalf." That item also carries conditions about interest on large contributions, and we have not worked through them here.

Neither provision, as we read it, names the Public Provident Fund. So we cannot, from these provisions, tell you that your PPF maturity is exempt or by how much. This is the kind of point where the answer depends on the notified status of the fund and on your own contributions.

Check the exemption with a CA before you treat the maturity amount, or any interest on it, as outside your taxable income. The Income-tax Act, 2025 applies from tax year 2026-27. The Income-tax Act, 1961 governs earlier years, as amended by the Finance Act 2026. Which Act applies to you depends on the year in which the amount is received or accrues.

Step by step

• Note the 31 March that ends your opening financial year; add five and fifteen years.
• Check the passbook for a missed minimum deposit; if there is one, ask the accounts office about revival and the current amounts (para 6).
• For a partial withdrawal, work out the ceiling (para 10), clear any loan, and apply in Form-2.
• At maturity choose closure (Form-3), continuing without deposits, or a five-year extension (Form-4).
• Ask a CA to confirm the tax treatment before you file.

What not to do

• Do not deposit after maturity without having filed the extension option. Para 12(3) treats it as irregular and refunds it without interest.
• Do not treat the 50% rule as 50% of your current balance.
• Do not rely on a rate, fee or limit you read on a website without checking the current scheme text and its amendments, including the 2020 amendment.
• Do not assume tax-free status without checking.

What to do now

• Next step: note the date your account reaches five years and fifteen years from the end of the year it was opened (paras 10 and 11, Public Provident Fund Scheme, 2019).
• Deadline: if the account has matured and you want to continue with deposits, the option must be made before one year from maturity, in Form-4 (para 12(2)).
• Consequence of missing it: deposits made afterwards are refunded without interest (para 12(3)); and once you continue without deposits for more than a year, you cannot go back to continuing with deposits (para 11(3)).

Have a CA review your facts before you act or file.

FAQs

Can I withdraw from my PPF in the first five years?
Partial withdrawal under para 10 starts only after five years from the end of the year of opening. In the earlier window, the scheme offers a loan under para 8 instead.

How many withdrawals can I make in a year?
Under para 10(1), a partial withdrawal may be availed once in a year, and only from an account that is not discontinued. After maturity, if you keep the account without deposits, you may make one withdrawal each year of any amount within the balance (para 11(2), proviso).

I forgot to submit the extension form. Can I still deposit?
Para 12(3) says no deposits can be made if you do not give your option within one year of maturity. A deposit made anyway is treated as irregular and refunded without interest.

Can I close the account early for my child's education?
Para 13(1)(b) allows premature closure for higher education of the account holder or dependent children, with the documents the paragraph lists, but not before five years from the end of the year of opening. The interest is lower by one per cent as described above.

Is my PPF maturity tax-free?
The exemption wording we read does not name PPF. Please have a CA confirm the exemption for your year and facts.

What happens to my PPF if the account holder dies?
The account is closed, and the nominee or legal heir cannot continue it (para 14(1)).

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