When PPF account holders can close accounts before maturity
Public Provident Fund or PPF account is one of the high yielding (currently, PPF interest rate is 7.21 per cent) small saving schemes backed by the Government of India (GoI). It has a maturity period of 15 years but in certain cases, an account holder can close one’s account before maturity period as well. The PPF withdrawal rule says that a PPF account holder can close the account subject to fulfillment of certain terms and conditions, provided the account has completed five complete financial years.
Speaking on the terms conditions for PPF account closure before 15 years Mumbai-based tax and investment expert Balwant Jain said, “PPF account holder can withdraw complete amount if the account holder, its life partner or any of the dependents (parents or children) faces life threatening disease. The PPF account closure is also allowed in case the account holder needs money for higher studies for himself or for its children.” Jain went on to add that one can close PPF account in case of residential status change also.
Highlighting upon the PPF interest rate applicable in the case of pre-mature PPf account closure; SEBI registered tax and investment expert Jitendra Solanki said, “In case of pre-mature PPF account closure, one will get 1 per cent lesser PPF interest rate on one’s money and pre-mature PPF account closure is allowed only when the PPF account has completed five complete financial years. Means, if a PPF account has been opened on 1st June 2020, then pre-mature closure is allowed only from 1st April 2026 after completion of five full financial year of FY 2021-22, FY 2022-23, FY 2023-24, FY 2024-25 and FY 2025-26.” However, in the case of death of the PPF account holder, the nominee is allowed for 100 per cent PPF withdrawal even when the account is less than five year old.
So, here are the 4 conditions when PPF account can be closed 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;
However, barring first condition, rest 3 conditions are applicable only when the PPF account has account has completed 5 full financial years.
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