Partial Withdrawal vs Premature Closure in PPF – Key Differences

The Public Provident Fund (PPF) is a long-term savings scheme with a lock-in of 15 years. However, investors may need access or withdraw funds before maturity. This can be done in two ways:

• Partial Withdrawal – limited access after a few years.
• Premature Closure – complete closure before 15 years under special conditions.

Both options are very different. Let’s understand Partial Withdrawal vs Premature Closure in PPF in detail.

Partial Withdrawal from PPF

• Allowed after completing 7 financial years.
• You can withdraw up to 50% of the balance at the end of the 4th year or the preceding year (whichever is lower).
• Only one withdrawal per financial year is allowed.
• The account continues to remain active after withdrawal.
• Interest is still earned on the remaining balance.

Example:
If you opened a PPF account in April 2015, you can make your first withdrawal in FY 2022-23 (after 7 financial years).
If your balance is ₹4 lakh, you can withdraw up to 50% = ₹2 lakh.

Premature Closure of PPF

• Allowed only after completing 5 financial years.
• Permitted under specific reasons:
  • Serious medical treatment (self or family)
  • Higher education (self or child)
  • Change in residency status (becoming an NRI)
• Full account closure is allowed, but with a penalty.
• Penalty: 1% lower interest rate on the entire balance (retrospective reduction).

Example:
If your account earned 7.1% interest for 8 years, and you close it prematurely, the interest will be recalculated at 6.1%. You lose 1% per year on the whole balance.

PPF Partial Withdrawal vs Premature Closure – Key Differences

Feature	Partial Withdrawal	Premature Closure
When Allowed	After 7 financial years	After 5 financial years
Amount	Up to 50% of balance	Full balance
Frequency	Once per financial year	One-time closure
Account Status	Continues till maturity	Closed permanently
Conditions	No special reason required	Only for medical, education, or NRI
Penalty	No penalty	1% lower interest on entire balance
Best For	Short-term needs without breaking account	Emergency or unavoidable situations

Which Option Should You Choose?

• Partial Withdrawal is better if you need limited funds and want to keep the account running for long-term benefits.
• Premature Closure should be used only in unavoidable situations since it reduces your overall returns.

FAQs on PPF Withdrawal and Closure

Q1. Can I withdraw money from PPF anytime?

No, only after 7 years (partial withdrawal) or 5 years (premature closure with conditions).

Q2. How much can I withdraw from PPF before maturity?

Up to 50% of the balance after 7 financial years.

Q3. What is the penalty for premature closure of PPF?

Your entire account balance earns 1% lower interest than the declared rate.

Q4. Can I close my PPF account early for buying a house or marriage?

No, premature closure is allowed only for medical, education, or NRI status.

Q5. Which is better – partial withdrawal or premature closure?

Partial withdrawal is better as you keep earning full interest on the remaining balance. Premature closure should be the last option.

Both partial withdrawal and premature closure provide access to your PPF money before 15 years, but the rules and impact are very different.

• Choose partial withdrawal if you only need part of the funds.
• Choose premature closure only in emergencies, since it reduces your total returns.

This way, you can balance your short-term needs with long-term wealth creation.