PPF Premature Closure after 5 years - Latest Rule (2016)
PPF account has a lock-in period of 15 years. Up until now, you were allowed to close the account prematurely only in the event of the death of the Account holder. But now you can close prematurely, after completion of 5 years, for medical emergency and higher education also, though with a penalty of 1% reduction in interest rate throughout.
On Jun 18th 2016, finance ministry issued a new notification containing updated rules for premature closure of PPF. You can see the official gazette notification here. Let us understand the details -
Premature closure, after completion of 5 years, is allowed on following grounds:
- Medical emergency: Serious ailments or life threatening disease of account holder, spouse, children or parent, on production of documents from medicial authority.
- Education expense: Higher education of account holder in India or abroad on production of relevant documents.
Penalty for Premature closure
A penalty of 1% in interest rate is applicable for all interest received in the PPF account since opening of the account.
Please note that premature account closure in case of death of account holder was and still is allowed anytime without attracting any penalty.