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Five Rules on Premature Closure of PPF Accounts

Despite falling interest rates, PPF or public provident fund is one of the most popular long-term investment options. Apart from attractive interest rates, PPF, which is backed by Government of India, offers facilities such as loan, early withdrawal and extension of account. The maturity period of PPF account is 15 years but can be extended within one year of maturity for further 5 years and so on. PPF also offers the facility of premature closure of account in specific situation.

Time Period
The PPF account can be closed prematurely after completion of five financial years in specific situation.

Premature Closure of PPF Account Allowed For Medical Treatment

The PPF account can be closed prematurely after completion of five financial years for the treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children or parents, on production of supporting documents from medical authority.

Premature Closure of PPF Account Allowed For Higher Education

Similarly, the PPF account can be closed prematurely after completion of five financial years and for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India or abroad.

Penalty On Premature Closure PPF Account

Premature closure is subjected to deduction equivalent to 1 per cent less interest “on the interest rates as applicable from time to time on the deposits held in the account from the date of opening of the account till the date of such premature closure,” says a notification.

How Much Will Be Deducted In Case Of Premature Closure Of PPF Account

 

table

(The interest payable to depositor in case of premature closure of PPF account. Source: Ministry of Finance)

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