Public Provident Fund (PPF) is one of the best Debt oriented Saving options that are available in India. It is also one of the most tax-efficient financial instruments.
PPF Account has a lock-in period of 15 years. A Public Provident Fund (PPF) account gets matured after the completion of 15 years only.
There are certain options for an account holder to make partial withdrawals from PPF. But, a PPF account can be closed prematurely only in the event of the death of the Account holder.
The government has recently issued a notification announcing the latest PPF Account premature closure norms or rules. You can now close your PPF account before the maturity date. Click on the below image to download the latest notification on PPF Premature closure rules.
When can I close my PPF Account prematurely?
As per the latest rules, a subscriber of PPF Account shall be allowed premature closure of his/her account (or) account of a minor of whom he/she is the guardian on the below mentioned reasons;
- A PPF Account can be closed in the event of the death of the Account holder.
- PPF Account Premature Closure is accepted when the amount is required for the treatment of serious ailments (or) life threatening diseases of the Account holder (self), Spouse, dependent children or parents of the Account holder.
- PPF Account Premature Closure is also allowed when the amount is required for higher education of the Account Holder (subscriber/self) or minor account holder.
- Kindly note that you can close PPF account prematurely only if your account has completed FIVE Financial Years. (This rule is not applicable in case of ‘death’ of the account holder.)
- If the reason for Premature closure of PPF account is ‘medical treatment’, you have to produce supporting documents from competent medical authority.
- If the reason for premature closure of PPF a/c is ‘higher education’, you have to produce fee bills and documents confirming admission in a recognized institute of higher education in India or abroad (foreign country).
- Another important point is, a penalty of 1% is deducted from the applicable interest rates on the deposits held in the PPF account. This is applicable on the deposits from the date of opening of the PPF account till the date of premature closure of PPF account.
- If a PPF account that has already completed 15 years and has subsequently been extended under the provision of para 9(3A) of the PPF Scheme is closed prematurely before the completion of the current 5 year extended block period, the reduction in interest rate by 1% point shall be applicable from the date of the commencement of the current 5 year block period and not from the date of initial opening of the account. (Latest update : 02-Aug-2017)
PPF Account Premature Closure & Eligibility Amount Calculation
Below illustration gives you an idea about the impact of 1% penalty on your accumulated deposits.
- Let’s assume the account opening date of a PPF account as 01-April-2006. In this case, the premature closure of PPF account is allowed from the date of 01-04-2012. (So, if you open the account say in 2016 then premature closure will be allowed from FY 2022.)
- If premature closure happened in say 2015-16 then notice that 1% reduction in Rates of interest is applied on all the previous financial years rates of interest.
- In the above example, if PPF account is prematurely closed in FY 2015-16, you will receive Rs 1,37,170 as the withdrawal amount. Whereas, the actual accumulated balance is Rs 1,44,207.
I hope you find this post informative and useful. Kindly share your comments on PPF Account premature closure new rules. Cheers!
(References : finmin.nic.in & freefincal.com) (Post published on : 21-June-2016)
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what is the tax implication on ppf maturity of 15 years on the money principal and interest accumulated.
Dear bhaskaran,
The maturity proceeds with interest is tax-exempt.
Related article : Tax Treatment of various Financial Investments
Hi, I have ppf account in ICICI bank. Now i want to close my saving account from this bank. Will i get my PPF money with this closure?
Dear Khyati,
PPF has certain exit rules.
There is no need to close PPF account, you can continue it and deposit the amount periodically from your any other bank account.
Hello Sir,
Plz Help me.
I opened ppf account in Aug 2016, but i have urgent work for money in oct 2018, can I Close my ppf account, any how… plz reply me as soon as possible. plz advise me if any possibility to close my account.
Dear Mr Singh,
Kindly go through the points given in the above article under the section – When can I close my PPF Account prematurely?
Sir,please help me.
Where i should submit the documents.
Sbi manager are unaware of the process.
They told me that its a government money so i hav to go to ministry of finance office to submit the documents.
Whats is the procedure sir.
If u know please let me know sir.
Just bcz sbi staff don’t know anything about premature closure of ppf.
How i can get my money. And in how many days .thanking you
Please please help me sir
Dear Sushil ..You can submit the form at bank. If they do not provide your the required support, kindly escalate the issue with the higher authorities of your bank.
Ok sir.thanking you
I will went on Tuesday to meet higher authorities of bank.
having one query regarding PPF premature closure . Banks credits the interest amount on the basis of minimum balance of every month after 5th day of closing . so If i am going for premature clsoure then it will deduct 1% from monthly calculated Interest or from the total interest coming for a financial year.I am asking becoz there is considerable difference. Another query is if they deduct it from montly interest amount then if for a financial year ROI has been changed then how bank will calculate it.
Hi,
Is it possible to close the PPF account after completion of 15 years but it was extended for 5 years after that ? To be more clear, the PPF account was extended for 5 years after 15 years, but i would like to close it before completion of extended period of 5 years. What is the procedure ? Any penalty will be applied ?
Dear AM,
You will be allowed to withdraw 60% of the balance at the beginning of each extended period (block of five years). This can be single withdrawal or in installment in each year. It means, let us say the account matured on 1st April, 2016 and the available balance is Rs.1 Cr. Then, you are allowed to withdraw 60% of this Rs.1 Cr during the block period of 5 years i.e. Rs.60 lakh. You can withdraw Rs.20 lakh in 1st year extension, Rs.10 lakh in the second year and Rs.5 lakh in the third year and so on until 5 years extension matures.
Hello,
in PF passbook page there are 3 columns are there 1. employer contribution 2. employee contribution and 3 pension contribution, in this we will get pension contribution?
Dear prince ..Kindly go through this article : EPF components & How EPF interest is calculated?
WEBSITE TO CHECK PF AMOUNT THATS BEEN ACCRUED IN MY ACCOUNT
Hello Sreekanth,
I saw in yesterday’s paper that ppf (post office) can be 100% withdrawn without any pre conditions. Meaning I don’t need to show proof of neediness.
Is this authentic? I tried to search in gazette of India. It’s too difficult to search there. Maybe you have accurate information on this?
Thanks.
Dear Deepak,
If possible, kindly share the url link of that article. (News paper name??)
Sir,
i would like to buy a ‘Term Insurance plan” and also “LIC Jeevan Anand” plan.
is it advisable to take both the plans?
kindly reply.
Dear Suresh,
If you buy a Term plan with adequate life cover, you may ignore buying a Jeevan Anand plan.
May I know why would you like to buy both the plans?
Sir,
For premature withdrawal, penalty of 1% is recovered. This rule is applicable in case of death of an account-holder?
please clarify.
Regards
Madhusudan kakirde
Dear Madhusudan..I believe that 1% penalty will not be levied in such a scenario.
DEAR SIR,
MY AGE IS 46 YEAR AND I AM WORKING IN A PVT LTD COMPANY SINCE LAST 5 YEARS. CAN I OPEN MY PPF ACCOUNT AND HOW. WHAT IS THE MONTHLY CONTRIBUTIONS FOR THE SAME.
PLEASE ADVICE ME.
Dear SARVESHWARA..Yes, you can open PPF account (in post office / authorized banks). A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account, and a maximum deposit of Rs.1.5 lakhs (as on Financial year 2015-2016) can be made in a PPF account in any given financial year.
Monthly contributions are not mandatory.
I am a Nepali Citizen. I am residing in India for last 8 years.
I own PAN card, Voter ID and a Bank Account.
Please advise me if I can open a PPF Account
Dear Bijay..I believe that you may not be eligible to open PPF a/c (I am not very sure though, will try to get more info).
Please provide clear cut advise..
Hi,
MY salary rs.27500 but yet not applicable PF company , to apply company for PF what about salary & PF calculation ??
Dear dipak..Kindly re-phrase your query, dint get you.
Every time I ask a question on this blog I get an e mail asking to click ( perhaps) a web address.The address is not clickable and that is the end of that question
Dear Ravi,
I could see that you have posted (till date) 3 comments and I have responded to all the three.
Kindly note that the link you get in email is for ‘getting email alerts if I respond to YOUR comments’. You may choose to ignore those emails if you wish so.
IF I WILL TAKE PF ADVANCE CAN YOU GUIDE ME IT IS RE SUBMISSION AMOUNT OR WHAT.
Dear Ahmad..There is no need to repay it. Kindly read: EPF partial withdrawal rules.
Good information!!!
HI IS IT POSSIBLE TO SHIFT YOUR PPF ACCOUNT FROM POST OFFICE TO AXIS BANK? AND HOW TO DO IT,
Dear Gaurav..Kindly read this article, click here..
wow, thanks a lot
Rs 13,37,170 as the withdrawal amount— he is a typo it should be Rs.137170.
Thank you dear Sumit for pointing out the typo error. I have corrected it.
Thanks for sharing these info sir.. Very useful
Superb Info Srikanth ..Thanks !