What happens to a Public Provident Fund account after the death of the account holder

As per India Post, “In case of death of the account holder, the account shall be closed, and the nominee or legal heir(s) shall not be allowed to continue deposits in the account. The balance in the account of the deceased account holder shall earn interest till the end of the month preceding the month in which the eligible balance is paid to the nominee or the legal heir, as the case may be.”

This means that in case of the death of a PPF account holder, the account is closed immediately, and it cannot be continued further. The nominee or legal heir is not allowed to make any fresh deposits into the account after the account holder’s death.

However, the existing balance in the account does not stop earning interest right away. It continues to earn interest until the end of the month preceding the month in which the money is finally paid to the nominee or legal heir.

Once the claim process is completed, the entire eligible balance is paid to the nominee or legal heir, and the account is closed permanently.

PPF deposits explained: How much you can invest and how it works

Under the scheme rules, the minimum deposit required in a financial year is ₹500. On the higher side, the maximum deposit allowed is ₹1.50 lakh in a financial year. This limit is not just for a single account, but applies collectively. It includes deposits made in your own PPF account as well as any account opened on behalf of a minor child.

PPF interest explained

The interest is not paid out monthly. Instead, it is calculated every month but credited to the account at the end of each financial year.

One of the key benefits of the PPF scheme is its tax treatment. The interest earned in a PPF account is completely tax-free under the Income Tax Act.