Finance Ministry has issued a notification dated 18.06.2016 vide which premature closure of ppf account is allowed in given conditions with a interest penalty of 1 % .However this facility is available only if PPF account is five years old.
Further this premature closure can be availed only in case of higher education of child or expenditure towards medical treatment of account holder/spouse /dependent children or parents .
Further ,the account holder shall produce document related to higher studies/medical treatment along with premature closer application for PPF account.
The relevant notifcation is reproduced hereunder
TO BE PUBLISED IN THE GAZETTE OF INDIA,EXTRAORDINARY, PART II. SECTION 3, SUB-SECTION
MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION Dated 18.06.2016
In exercise the powers conferred by sub-section of (4) of section of section 3 of the Public provident Fund Act, 1968, the Central Government hereby makes the following scheme further to amend the Public Provident Fund Scheme, 1968, namely:-
1. (1) This Scheme may be called Public Providen1 Fund (Amendment) Scheme, 2016.
(2) It shall come into force on the date of its pubcation in the Official Gazette.
2. In the Public Provident Fund Scheme, 1968, in Paragraph 9 for sub-rule 3(C) the following sub-paragraph1 shall be substituted: namely.-
‘(3C) A subscriber shall he allowed premature closure of his account or the amount of a minor of whom he is the guardian. on a written application to the .Accounts Office on any of the following grounds namely :-
- (i) that the amount is required for the treatment of serious aliments or life threatening diseases of the account holder. spouse or dependent children or parents, on production of supporting documents from competent medical authority;
- ii) that the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad:
Provided that such premature closure shall be allowed. only after the account has completed five financial year.
Provided further that premature closure under this sub-paragraph shall be subject to deduction of such amount which shall be equilent to one percent less interest on the interest rates as applicable from time to time in the table payable on the deposits held in the account from the date of opening of the account till the date of such premature closure, calculated in accordartoe with the sample calculations as shown in the table on next page:
The calculation given in notification is incorrect as pointed out with red arrow.Interest should be taken as 8 % -1% =7%.where as calculation has been done with 7.7 %.
Correct calculation has been given below
| Year | Opening balance | Fresh Deposit | Total | Rate of Interest | Interest minus 1 % | Interest Accrued | Outstanding balance |
| 2006-07 | 1000.00 | 1000.00 | 8.00 | 7.00 | 70.00 | 1070.00 | |
| 2007-08 | 1070.00 | 500.00 | 1570.00 | 8.00 | 7.00 | 109.90 | 1679.90 |
| 2008-09 | 1679.90 | 500.00 | 2179.90 | 8.00 | 7.00 | 152.59 | 2332.49 |
| 2009-10 | 2332.49 | 700.00 | 3032.49 | 8.00 | 7.00 | 212.27 | 3244.76 |
| 2010-11 | 3244.76 | 600.00 | 3844.76 | 8.00 | 7.00 | 269.13 | 4113.89 |
| 2011-12 | 4113.89 | 1000.00 | 5113.89 | 8.60 | 7.60 | 388.66 | 5502.55 |
| 2012-13 | 5502.55 | 1200.00 | 6702.55 | 8.80 | 7.80 | 522.80 | 7225.35 |
| 2013-14 | 7225.35 | 1500.00 | 8725.35 | 8.70 | 7.70 | 671.85 | 9397.20 |
| 2014-15 | 9397.20 | 1500.00 | 10897.20 | 8.70 | 7.70 | 839.08 | 11736.28 |
| 2015-16 | 11736.28 | 1000.00 | 12736.28 | 8.70 | 7.70 | 980.69 | 13716.97 |
| 9500.00 | 4216.97 | 13716.97 |