PPF Account for Minor and Self
PPF (Public Provident Fund) is among the safest investment options out there, offering complete income tax exemption for about 8% returns.
It is the perfect long-term investment vehicle so far as the debt category is concerned, making it an effective savings tool for people who are soon to retire.
Features and Benefits
- An annual deposit of at least Rs.500 must be made in your PPF account.
- Rs.1.5 lacs is the maximum deposit you can make in your PPF account.
- Multiple deposits and lump sum deposits can be made in multiples of five, but the number of instalments per annum cannot exceed 12.
- The tenure for PPF is 15 years, but the effective period is 16 years as the 15-year term is added to the year of opening your account.
- PPF operates on the basis of financial year, i.e. the 1st of April to the 31st of March.
- Interest is credited at each financial year-end.
- Interest for PPF is computed monthly on the least balance between the fifth day and the last day of the month, but the overall interest is added to the account only when the year ends.
- The interest accrued in PPF is fixed for one year and then subject to change. Since it is linked with the 10-year government bond yield, the interest rate is usually 0.25% more than the average government bond yield.
- The interest accrued on the PPF account is totally exempt from tax under Section 10 (11) of the Income Tax Act.
- PPF accounts can only be opened in an individual’s name and not as a joint account.
PPF Account Eligibility for Minors
Given below are the eligibility criteria to open a PPF account for minors:
- The Public Provident Fund allows residents of India to open accounts and get tax-free returns.
- One of the guardians can open the PPF account.
- Individuals who are having PPF account and are operating it on behalf of the minor should be a legal guardian.
- The PPF account should not be operated by the grandparent of the minor unless they are legal guardian in case of the absence of the parents.
- A nominee should be registered while opening the PPF account.
- The individual can make a minimum contribution of Rs.500 and a maximum contribution of Rs.1.5 lakh to the minor's PPF account in a financial year (Note that the maximum contribution an individual can make in a financial year is Rs.1.50 lakh).
How to Open PPF Account for Minors?
The Public Provident Fund account should be opened with a designated bank or post office that have opened PPF accounts.
Documents Required
The following are the list of the documents required to open a PPF account for minors:
- Details of the minor and guardian in the account opening form.
- Know Your Customer (KYC) documents of the customers.
- Aadhar Card
- Birth certificate
- Passport size photograph
- A cheque mentioning the initial contribution to the PPF account of Rs.500 or more
Investing in the name of minor child or major child
In case a parent invests money in the name of a child who is under 18 years of age, the income is merged with the income of the parent who draws a higher income. For the income accrued through investments made in the child’s name, an annual exemption of Rs.1500 per child can be availed for a maximum of two children.
The PPF account in the minor child’s name can be opened by either the mother or father of the child, but both parents cannot open individual accounts for the same child.
In case a parent wishes to open a PPF account for their child who is older than 18 years of age, the child is considered a separate individual for tax reasons, meaning that the child’s income will not be combined with the parent’s income.
The deductions and exemptions enjoyed by the child will be the same as any adult taxpayer. Parents can choose to gift money to their children who are majors and later invest it for tax-free yields.
Disclaimer
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2025 BankBazaar.com.