New PPF Rule: Changes in Premature Closure Rules for PPF Accounts


Changes in PPF Premature Closure Rules

The Department of Post has recently implemented significant modifications to the premature closure rules of the Public Provident Fund (PPF) accounts, as outlined in a notification dated November 7, 2023. This article delves into the updated regulations, shedding light on the grounds for premature closure, alterations in interest calculation, and the overall impact on PPF account holders.

Premature Closure Grounds:

PPF account holders can now request premature closure under specific circumstances, including:

(a) Treatment of a life-threatening disease affecting the account holder, spouse, dependent children, or parents. Supporting documentation and medical reports from a recognized medical authority are mandatory for verification.

(b) Pursuing higher education, both for the account holder and dependent children, validated by documentation and fee bills confirming admission to a qualified institute of higher education in India or overseas.

(c) Change in residency status of the account holder, supported by the submission of a copy of the Passport and visa or Income tax return.

However, it’s important to note that premature closure is not permissible before the completion of five years from the end of the year in which the account was opened.

PPF Interest Calculation: Previous vs. New Rule

The interest calculation on premature closure has undergone a crucial amendment. Previously, the interest rate on premature closure was 1% lower than the rate credited to the account from the date of opening or extension.

Under the new rule, as per the modifications in the Public Provident Fund Scheme, 2019, the second proviso in paragraph 13 has been altered. The words “or from the date of extension of the account” have been substituted with “or from the date of commencement of the current block period of five years.” Consequently, the interest allowed on premature closure will now be 1% less than the interest periodically credited to the account from the commencement of the current block period of five years.

Interest Payment Mechanism:

Interest, calculated at a rate of 7.1 percent per annum, is paid on the lowest balance in the account between the closing of the fifth day and the end of the month. Annually, interest is credited to the account, irrespective of any account office changes resulting from a transfer during the year.

PPF Account Closure Process:

Account holders can apply for the closure of their PPF accounts after the completion of fifteen years from the end of the year in which the account was opened, utilizing Form-3. The accounts office will process the withdrawal of the entire balance plus interest up to the last day of the month preceding the month in which the account concludes.


These alterations in premature closure rules and interest calculation for PPF accounts signify a shift in the financial landscape. Account holders should stay informed about these changes to make well-informed decisions regarding the premature closure of their accounts, ensuring compliance with the updated regulations outlined by the Department of Post.


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