Public Provident Fund: Here's When Account Holders Can Close Accounts Before Maturity

In case of death of the PPF account holder, the nominee can process 100 per cent the withdrawal even when the account is less than five year old.

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New Delhi: In times of pandemic, small savings schemes such as Public Provident Fund or PPF account has come to the rescue of several subscribers facing the brunt of job losses and financial crunch. PPF remains one of the most attractive small saving schemes offering substantial risk-free return which is income tax exempted.

At present PPF offers 7.21 per cent interest rate and has a maturity period of 15 years. However, the account holder can also opt for closing account before maturity period as well in certain conditions.

What does the PPF rule says?

As per the business publication Mint, a PPF account holder can opt for closing the account after fulfilling certain terms and conditions, given the account has completed five complete financial years.

The report quoted Mumbai-based tax and investment expert Balwant Jain saying that one can close the account in case the account holder needs money for higher studies for himself or for children." A PPF account can aso be closed in case of residential status change as well.

However, the PPF interest rate applicable will vary in the case of pre-mature PPF account closure. It is important to note that pre-mature PPF account closure is possible only when the account has completed five financial years.

Also, note that in case of death of the PPF account holder, the nominee can process 100 per cent PPF withdrawal even when the account is less than five year old. As per the Jitendra Solanki as quoted in the report, in case of pre-mature PPF account closure, the subscriber will get 1 per cent lesser PPF interest rate on the savings.

What are conditions to close PPF account before maturity?

1] Death of the PPF account holder;

2] Change of residential address of the PPF account holder;

3] In case of life threatening disease to the PPF account holder, life partner of the account holder or any of the dependents of the account holder; and

4] For higher studies of PPF account holder or its children;

It is important to note that except the first condition, others are applicable only when the PPF account has account has completed 5 full financial years.