Subscribers of public provident fund (PPF) will be allowed to close their PPF accounts prematurely after completing a minimum five years of deposit, reported Press Trust of India on Monday. Expenditure on higher education, medical treatment will qualify as reasons strong enough for complete withdrawal of amount and thereby its closure.
A subscriber can close his account and the account of a minor whom he guardians "on the ground that amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children," noted a notification issued by the finance ministry. It added, however, that as a prerequisite the account holder submit supporting documents from a competent medical authority.
A similar requirement exists for withdrawal or closure of PPF account to bear the expenses of their wards or themselves for higher education in India or abroad. Either account holder or the minor account holder needs to produce a proof of document and fee bills as confirmation of his/her admission into a recognised university.
PPF is a government-backed pension fund primarily used as a long term investment option. The government-backing not only offers some sort of surety, but also the interest rate decided every quarter on its deposit also makes it an attractive scheme. The interest rate, return and withdrawal of PPF are fully exempt from tax.
The interest rate on PPF was reduced from 8.7 percent to 8.1 percent on March 18, 2016 for the April to June quarter.