On the account holder's death, what happens to the PPF account?

Public Provident Fund (PPF) is a popular scheme among investors as it offers tax benefits on contributions as well as withdrawals after the lock-in period. The PPF scheme currently offers a 7.10 per cent rate of interest and this interest income is also non-taxable. But have you ever wondered what happens in the event of the death of a PPF account holder?

Well, in such incidents, the account will be closed as the nominee or the legal heir is not allowed to continue the account. The balance amount in the PPF account will continue to earn interest till the amount is claimed. Then, the balance is paid to the nominee or the legal heir. However, the excess amount deposited in a PPF account after the death of the subscriber will not attract any interest and will be returned as it is to the claimant.

Here's how you can file a claim. If a nominee exists, they need to produce Form G, death certificate and the passbook of the subscriber/account holder. Once the procedure is done, the whole amount will be credited to the nominee. If the subscriber has any loans against PPF, adjustments for its repayment and interest will be made and the balance amount will be credited.

But if there is no nominee, then the claim can be made by the legal heir. Along with the death certificate and Form G, the legal heir has to submit a succession certificate or letters of administration along with an attested copy of the will. It is also to be noted that if the amount is less than Rs 1 lakh, the amount can be claimed by the legal heir even without a succession certificate.

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