BAJAJ BROKING
January 25, 2025
5 mins read
If you want to save and invest money for a child’s future, then a public provident fund (PPF) account in his name can be a good option. PPF accounts for minors are quite common in India. Typically, such accounts are opened by one of the parents of a minor. Read more... In case, both the parents are no more, a legally appointed guardian can open such an account.
Such accounts provide a decent interest rate. Besides, they offer tax benefits on contribution amounts, interest earned, and maturity amount. As a result, they can help you create a sizeable fund for a child’s future by the time he turns 18.
While a PPF account is a good option to invest for a minor, you can even explore other options for this purpose (like equity mutual funds) based on your risk tolerance, investment objective, and investment horizon. Read less
Public Provident Fund (PPF) accounts for minors can be a great way to save and invest money for a child before he or she turns 18. PPF offers many benefits of long-term investments along with tax benefits, which makes it one of the most ideal investments for adults and minors.
Moreover, the PPF scheme has the backing of the Central Government. Hence, your money remains safe. If you want to open a PPF account for a minor, then do read this blog, as it takes a deep dive into this topic.
When a parent or a legal guardian opens a public provident fund (PPF) account in the name of a minor, it is called a PPF account for a minor. PPF is a long-term savings and investment scheme, which is backed by the Government of India.
PPF accounts offer several benefits. For example, they offer tax deductions up to a certain limit. Besides, PPF investments have a lock-in period of 15 years. As a result, an investor cannot withdraw funds before the completion of 15 years, which helps him reap the benefits of compounding his interest income.
By starting a PPF account for a minor, a parent or a guardian can help create a sizeable fund before the minor turns 18, thereby providing him with a solid financial base.
The PPF scheme is one of the most popular investment avenues in India. It is backed by the Government and offers several benefits. The interest and maturity amount of a PPF account are tax-free. Besides, when you contribute an amount to a PPF account, it is tax-deductible up to ₹1.5 lakh.
Moreover, the PPF scheme offers a decent interest rate. Plus, it has a lock-in period of 15 years. A combination of tax benefits, decent interest rates, and a lock-in period of 15 years, can help an investor earn significant returns on his investment over a long period of time. This is why several investors contribute to their PPF accounts every year.
The main objective of a PPF account for a minor is to build a sizable corpus for him by the time he turns 18. If a parent or a guardian regularly contributes to a minor’s PPF account, it can become a big amount by the time the minor becomes an adult, which can be used for his education, marriage, or any other purpose. More importantly, it will give him a solid financial base to build a successful adult life.
Anyone less than 18 can have a PPF account in his or her name, provided it is managed by a parent or a guardian until the minor turns 18. Hence, there is no age limit for opening a PPF account for a minor.
If you want to open a PPF account for a minor, here are the rules you must keep in mind:
You have to be an Indian resident to apply and open a PPF in the name of a minor.
A minor’s PPF account can be opened by his mother or father. However, the father and the mother both cannot open an account. Only one of them can do that.
If both the parents are deceased, a legally appointed guardian can open a minor’s PPF account.
A nominee has to be registered for a minor’s PPF account.
A minor can have only one PPF account in his name. Hence, you cannot open multiple PPF accounts in a minor’s name.
The following documents are required to open a PPF account in the name of a minor:
Please keep the following things in mind while opening a PPF account for a minor:
Needless to say, a PPF account for a minor is a great way to save and invest for a child’s future. Before opening a minor’s PPF account, you should use PPF calculators, which are available online. Such tools can help you estimate the growth of your PPF investments over time.
Meanwhile, you must bear in mind that a PPF account is not the only way to save for a child. If you can invest for a couple of decades, then you can also consider investing in equity-oriented mutual funds for a child. However, equity mutual funds are a riskier investment option than PPF.
Hence, the decision to start a PPF account for a minor depends upon your objective, the time horizon of investment, and your risk-taking ability.
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A change in the status of the PPF account happens when a minor turns 18. For this change, a parent or a guardian who had opened the account should file an application. After that, the just turned adult (who was a minor until recently) will manage the PPF account.
Yes, withdrawals can be made from a minor’s PPF account by a parent or guardian but only partially. However, it is possible only after the seventh year. Moreover, a declaration has to be signed by a guardian or a parent stating that the funds being withdrawn are meant only for the use of the minor.
Yes, a minor’s PPF account can be closed before he attains maturity under two conditions. If the funds in the account are required to pay for his higher education, then the account can be closed. If the funds are required for the accountholder’s medical needs, the account can be closed.
One of his parents (either the mother or the father) or a legally-appointed guardian can open a PPF account for a minor.
No, the interest earned on such an account is not taxable.
First, you should visit the current branch or post office where you have a minor’s PPF account. There, you need to get a PPF account transfer form and fill it. On this form, you should enter the address of the branch or post office where you want the account to be transferred.
A PPF account in a minor’s name earns a 4% interest per annum until he turns 18. Once a minor turns 18 (which means he becomes an adult), the PPF account will earn the standard interest rate, which is 7.1% per annum as of now.
The minimum initial amount you need for this purpose is ₹ 500. And, the maximum amount you can deposit is ₹ 1.5 lakh.
No, a minor’s PAN card is not mandatory to open his PPF account. However, his parents or guardians have to provide their PAN card to open his PPF account.
If you deposit more than ₹ 1.5 lakh in a PPF account, you will not earn any interest on the excess amount. Besides, you will not get any tax benefits under Section 80C on the excess amount.
Yes, you can open a PPF account online for a minor. You should access your savings account through netbanking and provide all the necessary documents to do so.
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