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How to Close Your PPF Account Before Maturity: Know the Process

Indiaemploymentnews January 21, 2025 09:39 PM

The Public Provident Fund (PPF) is a secure investment scheme offering tax benefits and a guaranteed return, currently at an interest rate of 7.1%. While this scheme has a 15-year lock-in period, situations may arise where you might need to close the account early. Here's what you need to know if you wish to close your PPF account before completing the full tenure.

Partial Withdrawals and Loans Before Maturity

Under normal circumstances, the PPF account can only be closed after 15 years. However, partial withdrawals are permitted starting from the 6th year. You can withdraw up to 50% of the balance, including interest, at that time. Before the 6th year, you can avail a loan of up to 25% of the total deposit, provided your account has been active for at least one year.

Closing PPF Account Early in Special Circumstances

While premature closure is not allowed under typical conditions, the government allows account closure in certain exceptional situations after completing 5 years:

Medical Emergency: If you need funds for medical treatment for yourself, spouse, or dependent children, you can close the PPF account after 5 years.

Higher Education: You can also close your PPF account to fund your own higher education or that of your dependent children.

Relocation Abroad: If you are moving abroad, you may choose to close your PPF account and withdraw the entire balance.

Death of the Account Holder: In the unfortunate event of the account holder's death, the account will be closed, and the nominee can claim the balance. The interest will be paid till the end of the month before the account is closed.

Steps for Premature Closure of Your PPF Account

To close the PPF account early, you need to submit a written application to your bank branch where the account is held, stating the reason for closure. You must also attach relevant documents based on the reason for premature closure:

Medical Emergency: A certificate from the medical authority.
Higher Education: Admission confirmation and fee receipt.
Death: A death certificate.

Once the documents are verified, the account will be closed, but the interest will be deducted at a penalty of 1% from the date of account opening. The remaining amount will be refunded to you.