After a Public Provident Fund (PPF) account completes its 15-year maturity period, investors have to decide whether to withdraw the entire corpus and close the account, extend it for another five years with or without fresh contributions or make phased withdrawals for their needs.
The right choice depends on factors such as financial goals, liquidity needs, tax planning and long-term wealth creation. While extending the account allows investors to continue earning tax-free interest, phased withdrawals can provide regular access to funds without closing the account entirely. Here’s a closer look at all options and which type of investor may benefit more from each.
Full withdrawal and account closure
After your PPF account reaches maturity, an investor can choose to close the account by reaching out to their bank or post office branch where the account was opened 15 years back. The entire accumulated amount, including the interest, will be credited to your linked bank account after processing.
The proceeds after closure of the scheme are not subjected to taxation in India as it falls under the Exempt-Exempt-Exempt () category, meaning your contributions, the interest earned, and the maturity amount are completely tax-free. This exemption applies to both old and new tax regimes.
This option may be suitable for investors who need immediate liquidity for goals such as buying a house, funding higher education, retirement expenses or repaying home loans. It can also work for those who want to shift their money to other investment avenues offering better returns or greater flexibility.
Extend PPF account with fresh contributions
An investor can extend their PPF account in blocks of 5 years as many times as they want. This can be done by submitting Form H (or Form 4) at your bank or post office within one year of maturity, along with continuing to deposit up to ₹1.5 lakh per year. The minimum amount that must be invested is ₹500 per financial year.
In this case, since you chose to keep contributing after the extension, you can also continue claiming Section 80C tax benefits under the old tax regime, allowing you to deduct up to ₹1.5 lakh per financial year from your taxable income.
If you choose to extend your for another 5 years after the first 15-year term, you can only withdraw 60% of the balance accumulated at the time of extension over the new 5-year period. In this case, you can only make one withdrawal per year.
This option is generally suitable for long-term investors who do not immediately require the money and want to continue building a tax-free retirement corpus. It may benefit salaried individuals, conservative investors and those seeking stable, government-backed returns along with Section 80C tax benefits.
PPF withdrawal rules after extension
If you don’t submit Form 4, the account will automatically renew in 5-year blocks (default), but you will not be permitted to make fresh contributions. As a result, you will also not be able claim 80C deductions under the Income Tax Act, but the existing balance remains active to earn tax-free interest.
Even if you choose not to make fresh contributions after extending your PPF account, you can still withdraw money from the account; however, only one withdrawal can be made per year. For instance, suppose your PPF account was opened in the year 2000 and had accumulated ₹30 lakh at maturity in 2015. If you extended it from 2015 to 2020, you can make a withdrawal up to the available balance from the account during this extended period, subject to the one withdrawal per year rule.
PPF partial withdrawal before maturity
Partial withdrawal from a account is also permitted when the account has been operational for at least 5 years, allowing account users to get access to a part of their accumulated funds while keeping the account operational and enjoying the compounded interest advantages, according to ClearTax.
For example, if you opened a PPF account in 2021 and contributed regularly every financial year, then in 2026, you can make a partial withdrawal of up to 50% of the balance available at the end of the fourth financial year preceding the year of withdrawal, subject to PPF withdrawal rules. To do this, you must submit Form C to your bank or post office.