Public Provident Fund account: Public Provident Fund (PPF) is considered to be a great savings instrument. Long term investment helps in building a large corpus in this.
Public Provident Fund account: Public Provident Fund (PPF) is considered to be a great savings instrument. Long term investment helps in building a large corpus in this. With good interest, PPF investments, interest and maturity amount are completely tax free. The maturity period of PPF is 15 years. Now interest is being given at the rate of 7.1%. But, the rules for withdrawal from PPF account are different. If an investor wants to close the account, then there are different rules for that. But, what happens to the PPF account if an account holder dies before maturity?
It is important to know this.
Public Provident Fund: What will happen on the death of the account holder?
If the account holder dies before the maturity of the PPF account, then his nominee can withdraw the money. In such a situation, the condition of completing 5 years of the account also gets rejected. After the death of the account holder, his Public Provident Fund account is closed. The money is given to the nominee or to the legal heir. But, the same account is not allowed to be carried forward.
Public Provident Fund: When can the account be closed?
PPF account holder can withdraw money before maturity in case of saving himself, spouse and children from life-threatening diseases. At the same time, money can be withdrawn from PPF account before maturity even in case of own education or higher education of children. In case the account holder becomes an NRI, the PPF account can be closed before maturity. PPF account can be closed after completion of exactly 5 years from the date of opening. However, during this period 1% interest will be deducted from the date of account opening.
Get the benefit of compounding interest
Any Indian citizen can open PPF account. For this he will have to prove it. The account can also be opened in the name of a minor. The interest rate on PPF is decided by the government and being a government scheme, government guarantee is also available. The interest is changed on a quarterly basis. At present, 7.1 percent interest is being available on PPF. However, interest is calculated annually. One can start with an investment of Rs 500 in PPF and there is an exemption to put a maximum of Rs 1.5 lakh in a financial year.
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