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Index Fund Corner
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The lock-in period for a Public Provident Fund (PPF) account is 15 years. However, withdrawals are limited during this time, and it is usually not permitted to close the account early.
Account holders are permitted to withdraw a portion of the balance after five financial years from the date the account was opened. You can withdraw up to 50% of the balance at the end of the 4th financial year before withdrawal.
Premature closure of a PPF account is permitted only under certain conditions, such as medical emergencies, higher education expenses, or a change in residency status (becoming an NRI). However, as a penalty for early closure, 1% of the interest generated is deducted.
The account cannot be closed before at least five years from the end of the year in which it was opened. The account holder must present Form 5 and supporting documentation to the bank or post office where the PPF account is held in order to pre-close the account.
You cannot withdraw a partial amount during pre-closure and it’s a must to withdraw the complete account balance.
How to pre-close a PPF account: Step-by-step
Here is a step-by-step guide on how to pre-close a PPF account.
Go to the bank or post office where the PPF account is held.
Fill out Form 5, which is the PPF Account Closure Form.
Submit the required documents to justify the pre-closure of your PPF account.
For medical emergencies, provide medical reports and hospital bills.
For higher education, submit the admission letter and fee receipts.
In case of a change in residency status (NRI), provide proof such as a visa and passport.
After verification, the bank/post office will process the request.
Once it is done, the balance will be transferred to your linked savings account.
The process takes 7–10 working days, depending on the bank/post office.
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