PPF account for minors was crafted with the sole aim of mobilizing small amounts’ savings to provide an investment with fair returns along with the additional income tax benefits. PPF accounts for minor benefits the account holder as it gives considerably good returns while being an extremely reliable and safe investment.
A PPF account for minors can easily be opened with a deposit of just Rs.100 while the yearly contribution must at least be Rs.500. This article provides a detailed overview of how to open a PPF account for minors, eligibility, documents required and taxation. Read on!
A PPF account for minors is an account the parent opens for the child. In such cases, the adult handles the PPF account for minors and self. However, a PPF account of the minor will only be handled by the parent/guardian until the child turns 18. Furthermore, the guardian can only open a PPF account for a minor if they are natural or legal guardians only. The scheme is valid only for Indian citizens.
The parent or guardian can contribute up to Rs. 1.5 lakhs every financial year to their child’s provident fund. It is important to note that the amount deposited in the minor and self account are clubbed and have a combined limit of Rs. 1.5 lakhs. In simpler terms, you split the limit of Rs. 1.5 lakhs between your and your child’s account.
The idea behind opening a PPF for minors is to help them have a safety net for their secure future. By starting this process early, they always have something to fall back on during difficult situations. As this investment opportunity guarantees decent returns, it helps you give your child a boost in their counting rewards. It guarantees them a stable financial future. Additionally, it provides the parent with tax benefits.
The adult’s KYC documents and their recent photograph are a mandatory requirement to complete the form filling process for opening a PPF account for minors and themselves. The parent/legal guardian must provide their basic details along with their child whose PPF minor account is to be opened. These details are crucial and must be filled out carefully on the account opening form. The legal guardian or parent must also produce age proof such as a birth certificate or Adhaar card for verification purposes.Also, the above-mentioned documents must be accompanied by the initial deposit cheque required for opening a PPF account for minors. The PPF account for minors can easily be opened in a nearby post office or bank. You can also use the PPF account for a minor online portal for online registrations.
Some specific requirements and conditions must be met to open a PPF account for a minor. The eligibility criterion includes:
The parents/legal guardian of the minor child must provide these documents given below:
APPF account for a minor is a very beneficial investment that can help you save money on taxes while also giving you a boost on your child’s financial security. Note that the interest on the amount deposited in the PPF account is tax-free. Furthermore, the amount received upon maturity is also tax-free. Interestingly, under Section 80C of the Income Tax Act, all investments made in PPF accounts also offer a special additional tax deduction of up to Rs. 1.5 lakh every financial year. However, the deduction limit available on the parents and child’s PPFaccount is only Rs. 1.5 lakh.
These considerations are vital to keep in mind before opening a PPF account for minors:
A PPF account for minors is a brilliant way to avail of the tax benefits up to Rs.1.5 lakhs annually while also simultaneously providing your child with a financial security blanket. The PPF account is flexible in terms of funding your child’s higher education or medical purposes, making it a good fit for early investment plans for your child. Furthermore, you receive decent returns for your investments.
Ans: Upon turning 18, the legal guardian or parent is responsible for applying with all the necessary documents and signatures as a request to transfer the power of the account to the minor.
Ans: Yes, the guardian can easily close the account of the minor prematurely. However, premature closing is allowed only when the sum deposited is being used for the child’s educational needs.
Ans: Money withdrawal from the minor account can be tricky. Although it is allowed, it can be done only after 7 years after depositing the money into the account. Furthermore, the guardian must show that the money withdrawn is being used only for the child’s needs.
Ans: The law does not allow you to deposit more than Rs. 1.5 lakhs a year. However, upon deposition of a greater sum, you shall not be eligible for tax benefits for the additional amount.
Ans: A family is allowed to have any number of PPF accounts. An individual account for each member is also allowed. However, an individual can have only one account either in a bank or in a post office and can deposit only Rs. 1.5 lakhs every year.
Ans: There is no age limit. One can even open a PPF account for a minor that can be handled by the minor only when she/he turns 18.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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