Individuals can open a PPF account in their own names and also for their minor children. Read this article to find out the various steps involved with opening a PPF account for minors.
The Public Provident Fund (PPF) rules permit Indian residents to not only open an account for themselves, but also for their minor children. One of the benefits of considering PPF for minors is its 15-year lock-in period. If a parent or guardian opens an account for the child at an early age, then by the time he or she starts working or becomes an adult, the account would have matured or be close to maturity. This money can be used to fund higher studies or meet any other expenses.
There is no age restriction with regards to opening a PPF account for a minor child. This means that an account can be opened by a natural or legal guardian for his or her new-born baby. Now, it should be noted that only one of the guardians can open the account. Both the father and mother cannot open the account on behalf of the same minor.
The parent or legal guardian will need to provide his or her details along with that of the minor in the PPF account opening form. KYC documents of the guardian with photograph shall be required, along with the age proof of the minor child (birth certificate or Aadhaar card). These must be submitted along with a cheque for initial contribution to the PPF account. An individual can open this account in a designated post office or a bank branch. A few banks provide the facility of opening a PPF account online through their websites.
The parent or guardian who makes the contribution to the minor’s PPF account can claim tax benefits under Section 80C of the Income Tax Act, 1961. The maximum deduction that can be claimed during a financial year under this section is Rs. 1,50,000. An individual who holds a PPF account for self and has opened another one for his or her child can avail a maximum deduction of Rs 1,50,000, taking both the accounts together.
A PPF account matures within 15 years from the year when the account was opened. The subscriber then has the option to either renew it for a block period of 5 years beyond the maturity period or close the account altogether and withdraw the money.
If the child is under 18 years of age when the PPF account matures, then the parent or legal guardian will decide which course of action to take - to withdraw the money or continue the account. However, if the child is 18 years or above when the account matures, then he or she can choose whether or not to exercise the option of continuing with the existing account (post-maturity).
It is important to note that if the minor turns 18 years of age during the lock-in period, an application will have to be submitted to change the status from minor or major. The signature of the individual has to be attested by the guardian who opened the account. Thereafter, the account’s operation can be handled by the major.
Important Points to Remember
- PPF account cannot be opened by grandparents for minor children, unless they are the legal guardians after the demise of the parents.
- The minimum annual amount required to keep the PPF account active is Rs. 500.
- It is recommended to register a nominee at the time of opening the PPF account.
Opening a PPF account for minors is advisable for parents or legal guardians seeking long-term investment solutions. Doing so will enable them to save for the important milestones tied to the child’s future, like higher education, marriage expenses etc. In addition to the financial security it offers, the parent or guardian can enjoy tax benefits under Section 80C of the Income Tax Act. So, on the whole, PPF can be regarded as a safe (since it is backed by the government) and beneficial investment tool for financially protecting the future of one’s children.
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