Because of its mix of safety and guaranteed returns, the PPF account, or Public Provident Fund scheme, is among the most popular long-term small savings schemes of India Post. You can open a PPF account at any bank or post office by making an initial contribution of Rs 500 only. Every quarter, the interest rate on PPF is modified. At present, the interest rate is capped at 7.1% that is fully exempted from income tax under section 80C. PPF has a long maturity duration or tenure of 15 years which makes it a long-term investment product in nature. However, under some circumstances, an account holder can close his or her account before the maturity date. The PPF withdrawal rule states that a PPF subscriber can close the account if specific requirements and criteria are met, and the account has been open for at least five years. So let's talk about the conditions and rules to make a premature exit from PPF in case of emergencies.
PPF Premature Exit Rules
If the account holder, spouse, or dependent children are identified with a life-threatening disease, the whole money in the PPF account can be withdrawn. The closure of a PPF account is also permitted if the account holder requires funds for higher education for himself or his or her children. Not only that, but one can also close a PPF account if their residence status changes. Premature PPF account closure results in a 1% PPF interest rate deduction from the amount. The interest will be deducted from the day the account was opened/extended, whichever comes first.
On the aforesaid criteria, the account can be closed by submitting the appropriate form along with the passbook to the appropriate post office or bank. Only when the PPF account has been open for five consecutive financial years, it can be closed prematurely. In the event that the PPF account holder dies, the nominee is entitled for a complete withdrawal of the amount, even if the account is less than five years old. The account will be closed if the account holder dies, and the nominee or legal heir(s) will not be permitted to continue making contributions to the account.
PPF interest will be paid until the end of the preceding month in which the account is closed if it is closed due to the death of the account holder. On an application to the concerned bank branch or post office using Form-5, an account holder or the guardian of a minor or person of unsound mind can make his or her account closed prematurely.