The Department of Post has made some changes in the premature closure rules of the Public Provident Fund (PPF) account. The Department made this change via a notification dated November 7, 2023.
According to the PPF rules, an account holder can submit request for the premature closure of his account or the account of a minor or person of unsound mind for whom he is the guardian on any of the following grounds:
(a) treatment of a life-threatening disease of the account holder, his spouse, dependent children, or parents, upon submission of supporting documentation and medical reports from a treating medical authority verifying such disease;
(b) higher education for the account holder or dependent children upon presentation of documentation and fee bills confirming admission to a qualified institute of higher education in India or overseas;
(c) on change in residency status of the account holder on production of copy of Passport and visa or Income tax return.
Provided, however, that an account formed under this Scheme may not be closed before five years have passed from the end of the year in which the account was opened.
Interest calculation earlier rule
“Provided further that on such premature closure, interest in the account shall be allowed at a rate which shall be lower by 1% than the rate at which interest has been credited in the account from time to time since the date of opening of the account, or the date of extension of the account, as the case may be”
Public Provident Fund: 15 lesser known but important rules
Interest calculation new rule
In the Public Provident Fund Scheme, 2019, in paragraph 13, in the second proviso, for the words “or the date of extension of the account”, the words “or from the date of commencement of the current block period of five years” shall be substituted.
This means that the interest will be allowed in the account at a rate that will be 1% less than the interest that has been periodically credited to the account from the date of commencement of the current block period of five years.
Interest at 7.1 percent per year will be paid on the lowest balance at the credit of an account between the closing of the fifth day and the end of the month. At the end of each year, interest is credited to the account. Note that interest is credited at the end of the year, regardless of whether the account office changes owing to a transfer of the account during the year.
Closure of account
The account holder may apply to the accounts office for the closure of his account at any point after the expiry of fifteen years from the end of the year in which the account was opened, using Form-3. Up to the last day of the month preceding the month in which the account ends, the accounts office will process withdrawal of the entire balance plus interest.
(Your legal guide on estate planning, inheritance, will and more.)
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