How to Open a PPF Account on your Minor Child Name?
As per the guidelines, an individual can open only one PPF account. However guardian / parents can open a PPF account in their minor child name. What are such specific guidelines on opening a PPF account in the minor's name? What are the benefits and limitations if you wish to open Public Provident Fund (PPF) on your minor child's name? Is there specific limitations in taxation?
Who is a minor?
Any child who has not attained the age of 18 years is termed as minor. Don’t laugh that I am telling you small things, I want to make it clear before I get into the actual topic J
Can Parent or Guardian open PPF account on behalf of minor child?
Minor cannot open a PPF account on his own. However, as per guidelines, Guardian or Parents can open a PPF account on his behalf. Generally in case parent is incapable or in case parents are not their, guardian can open a PPF account on behalf of the minor child.
How to Open a PPF Account on your Minor Child Name?
A parent or guardian who wants to open PPF account need to give declaration, including PPF account he or she is holding now or earlier. It includes PPF account no. bank or post office address where it is opened etc. Specify clearly in the application form that this is on behalf of child name. The process is a simple and PPF account in your minor child's name would be opened like any other PPF account.
What is the investment limit of PPF account opened in the minor child's name?
The total amount that can be invested in all PPF accounts put together, including PPF created in the minor child's name is Rs 1.5 Lakhs (effective Financial year 2014-15 onwards). Means, you cannot have a special amount of investment limit for the PPF account opened in the minor child's name. Also total claim for such guardian or parent under section 80C is as usual limited to Rs 1.5 Lakhs (effective financial year 2014-15 onwards) and no additional exemptions available.
What happens during the maturity of PPF account?
The PPF account maturity is 15 years.
- If the child has attained 18 years of age and PPF account matures after this, the accumulated PPF account would become his income. He can close the PPF account or extend for another block of 5 years. If he invests the maturity amount in any other bank FD, interest would become his income.
- If the child has NOT attained 18 years age and PPF account matures before this, the accumulated PPF account would become the income of a parent or guardian. A parent or Guardian can close his PPF account or extend for another block of 5 years. If guardian or parent closes the account and invests such amount in any bank FD, the interest received would become guardian/parent income only.
How to get maximum benefit by opening a PPF account in the minor child's name?
PPF provides 8.7% interest which is tax free. This is a good way to have child investment plan. While child father would have already opened a PPF account for tax benefit claims u/s 80C, one more account can be opened by mother on behalf of their minor child and vice versa. This way, parents can save Rs 3 Lakhs (Rs 1.5 Lakhs + Rs 1.5 Lakhs) and get 8.7% tax free returns which can be used for child education or for their marriage in future. There are almost zero investment options which are low risk and provide 8.7% tax free returns at maturity, hence PPF ranks high among all other options.
Conclusion: Parent or Guardian can open a PPF account in the minor child's name. This is one of the best ways to plan child education plan or planning for their marriage. If you are a low risk investor and want to get good tax free returns in the long run, you can open a PPF account on your own or on behalf of your child to enjoy such benefits.
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Suresh
How to Open A PPF Account on your Minor Child Name
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Dear Suresh ji,
My child ppf account is matured and he is still a minor.When I approached the SBI bank,the manager told me that you cannot close the account.only your child can do it after he will become major.so you extends it for 5 years.Pls suggest what to do.
Since your child is not major, you can extend for another block of period. You would get better interest in PPF compared to FD. You can extend Rajneesh
Dear Suresh ji,
But I need money for child education.so what is the rule.
Dear Suresh ji,
when I try to open a/c for my two kids (3 month old) in Punjab national bank, they said the minor should be 10 years old or above. Is it so ? please clarify.. thanks in advance
I don’t think so, pls approach ICICI Bank or HDFC Bank.
Does it make sense to have a PPF account in thename of a minor studying in India, while parents currently ar NRIs and hence do not have an active PPF account?
Hi,
My self and wife is working. I am having PPF account. Wife doesn’t have PPF . We have 3 kids. I have opened PPF for all 3 kids. For 2 kids I am the guardian. For 1 Kid wife is guardian. I would like to know, whether I can get a tax exemption 1.5 L for my self + 1.5L exemption for the kid for whom my spouse is guardian ? Similarly for wife also can get an tax exemption for the kid for whom I am the guardian.
Prince, To get tax benefit u/s 80C, it should be in your name. Similarly in case it is in your spouse name, your spouse can get tax benefit.
hi i m looking for some investment option for my child,she’s just 5 month old, basically my aim is to accumulate enough amount for her’s postgraduation /marriage i would like to invest for a period of 3-5 years only and nd looking for some option wer the money mature after like 18yrs.wht would be the best investment option a PPF a/c or single premium plan ?
Hello Dr. Suraj, PPF, yes good option you would get tax free amount too. However PPF lock in period is 15 years. Just check this article about top ways where you can save for your child. https://myinvestmentideas.com/2014/06/6-best-child-investment-plans-in-india/
We are service couple with accumulated salary after NPS is 80000per months. We have service life 20 years and 25 years. We have one year old boy child. Kindly advice me at my e mail id:- baruahdd2009@rediffmail.com how to invest for my child. At present our house loan EMI 23000, Lic (both) 50000 yearly.
hi my wife already had a ppf ac opened in 2006.In 2014 she got 2 additional ppf ac opened for our two minor children’s under her guardianship only in the same bank ,also she got her ppf ac too transferred from post office to same bank.Nobody in bank’s ppf deptt had objected to the idea of opening two more ppf ac’s apart from hers.
I wish to know whats needs to be done in this case,whether it has to be canceled or whats its implications if it can be continued.
Vivek, As per PPF guidelines, you are not supposed to do that. You can check and close them. You + your spouse can save Rs 3 Lakhs through PPF. Do you invest more than this in all combined accounts what you are holding ?
I have a ppf account in my name opened two years back. Now can i open another ppf account in my daughters name who is a minor.
i have opened it online do i need to cancel it or will it automaticially get cancelled for forms and documents are not yet submitted to the bank.
Regards,
George
Inform this to bank and they should cancel this
2 queries on PPF:
1. If I have 2 accounts (1 in my name, 2nd a/c is in name of daughter (who is a minor) where I am a guardian) and I invest Rs. 1 lakh each in both PPF accounts, can I claim tax benefit of Rs. 1.5 lakh in my name?
2. In the above case, the total investment in PPF has exceeded Rs. 1.5 lakhs. Will I get interest on the remaining Rs. 50,000? (Since there is a cap of Rs. 1.5 lakhs per PPF account)
Hi JK, As per rules, you cannot open second account either in your name or act as guardian for a PPF account opened in your child name. Hence you can get only Rs 1 Lakh exemption u/s 80C.
Dear Mr.Suresh,
1)I have 1 son & 1 daughter. Both are minor. I & My have PPF a/cs. Can i open on behalf of my both Kids a PPF account.
2)If i have surplus money then from other sources which are not guaranteed can i invest in my Childrens PPF. If we do it whether it will attract tax for that year?
3) Can i save 1.5lakhs X 4 members(6Lakhs) as a taxfree?
Kindly guide me
Dasnall, You can open maximum of 2 accounts in your family. You + your spouse or you + your spouse on behalf of your minor child. Max investment is Rs 3 Lakhs.
if both parent are holding ppf account then how to open ppf account for child.
Amar, Then it is not possible unless someone else can act as guardian on behalf of your child
Hello Suresh,
I would like to reconfirm if both parents can open a PPF account in the name of their child. It doesn't sound logical because it means that the child now has 2 PPF accounts and hence violates the rule that an individual can have only one PPF account at any point in time.
Please clarify on this point.
Thanks,
Pradeep, No. Only one of the parent can open PPF in their child name.
Dear Mr. Suresh,
Thanks for your views on this subject. Your articles are always helpful, so do keep writing on different issues.
Now, would you pl clarify that, whether s/he (minor) will be eligible to open PPF account on their own in future and can avail the tax benefit as per then rules.
Best Regards
Ashish
Ashish, After 18 years of age, existing PPF account can be continued for another block of 5 years after maturity. Once this account is over (15+5 years), they can open another account
if mother has PPF account and she had deposited maximum limit in it, can she open another Minor PPF account. Thats mean her yearly total investment in PPF is (1.5L(Mother) + 1.5L(child))=3L. Can this same apply to father
Amar, Mother cannot open PPF account in their child name if she is holding a PPF account
Hi Suresh
very informative article. In case the child has not attained the age of 18 years by after 15 years of opening of PPF account and it is extended for 5 years. In that case it would be child's income. Please let me know. Thanks.
Yes, thats correct.
Hello sir. first i want to say is this is a very good article as me and my wife was talking about it the other day.
so i want to open a PPF account on my name and my wife wants to open 1 also. can we both open 1 each behalf of my 4 year son? and the total savings we can do a year is 6lks?
plz advice
Only one PPF can be opened on behalf of your son. You can take on your name and your spouse can take on your behalf of your son. You can do Rs 3 Lakhs maximum savings per annum in these 2 accounts
So in total me my wife and my son can save 4.5L?
In total max amount would be Rs 3 Lakhs only.
very useful information..
1. you have said that wen the account matures and if the child is not 18 yet, receipts from the ppf account will be treated as parent's income.. does it mean that they will have to add it in their income and pay tax on it?
2. will the tax liability be same if the matured amount is re-invested in form of opening another ppf account?
Hi Supriya 1) No. PPF interest is tax free. However this would be treated as Parent’s corpus and any future earnings from such amount is taxable for parent/guardian 2) Since this is tax free, second point does not arise
Hi Suresh,
Great and timely article. I had my PPF account now running for over an year (opened at age 32). But my question is on another PPF account that I can open for my child. You said in this article that my wife can open a PPF on behalf of my daughter. Question is when the source of income is from me (wife doesn’t earn), is that still allowed to maintain 2 PPF account–mine and one that we will open for the child? What if at some point wife starts earning?. Please answer.
Hi Nitin 1) Your wife can open PPF account on your daughter name 2) She can deposit the amount in PPF 3) Maturity is any how tax free, hence it does not matter about clubbing provisions whether she is working and earning or not