Should I close my PPF and withdraw the amount?

During the extension period of the PPF account, can I close the account and withdraw the entire balance amount? - Subir Dasgupta

Although it is possible to close a Public Provident Fund (PPF) account and withdraw the entire balance during the extension period, it is not recommended.

This is because:

• The accumulated PPF balance continues to earn the same rate of interest as applicable to the scheme (which is 7.1 per cent per annum at present), and
• That interest earned continues to be tax-free.

It is important to note that a PPF account can be extended in blocks of five years upon maturity, with or without any further contribution. In case the investor doesn't communicate their choice, the PPF account (by default) gets extended for five years without requiring further contributions. Moreover, you are allowed to make one withdrawal (without any restriction on the amount) once every year.

Therefore, the PPF account can be an excellent fixed-income allocation providing guaranteed 7.1 per cent tax-free annual returns with an annual withdrawal facility. So in conclusion, the PPF account can be closed but it is not recommended.

Suggested read: How to withdraw partially from PPF?