Prematurely Closing a PPF Account: All you Need to Know

Public Provident Fund is one of the most advantageous investment schemes that you can put your money in.  However, for a long-time people used to shy away from it because of its extremely long maturity period of 15 years. To solve this problem and to revive people’s interest in the scheme, the government eventually lifted the “no-premature close” ban from it. So, you have the option to close the account now, but there’s a “catch”.

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If you are planning to close your PPF account prematurely, then you must know about certain terms and conditions that are involved.

Terms and Conditions

Even though you are allowed to close your PPF account before maturity, you still have to keep the account for a minimum period of 5 years before you can do that. Plus, unless you have any of the only two reasons given below, you can’t close the account:

• If you want the funds to pursue higher education.
• If you have to pay for medical expenses for yourself, your spouse, children (that are dependent), or parents, in case of a chronic illness.

Account Closure Process

If you want to close your PPF account, then you have to write and submit an application to the accounts office where your account exists. You are also required to mention the reason why you wish to close the account in the application.

When submitting the application, you are also required to attach a copy of your PPF passbook. If the cited reason is medical treatment, then you must attach appropriate documents (issued by a medical authority) supporting the same. In case the reason is higher education, then you can attach fee receipts, admission certificate, etc.

Note: Prematurely closing a PPF account attracts a penalty which is 1% minus the interest amount based on the interest rate applicable from the date of account opening till the date of account closing (prematurely).