PPF For Kids: Every parent strives diligently to ensure a bright future for their children. As a result, they save and invest their hard-earned income to fulfill their children’s educational and future requirements. If you also wish to secure your child’s future, the Public Provident Fund (PPF) is an excellent investment choice.
Key Takeaways
Quick Read- How can you open an account in your child's name?
- You can open an account at a bank or post office
Established by the government in 1986, PPF is a government-supported savings scheme that guarantees tax benefits on the investment, maturity amount, and interest earned (commonly referred to as EEE benefit). Additionally, it currently provides a fixed interest rate of 7.1%.
How can you open an account in your child’s name?
For children or minor applicants, a parent or guardian can establish a joint PPF account, which can be modified once the account holder reaches 18 years of age. When a child turns 18, a new application form along with the necessary documents must be submitted to the bank or post office to update their account status from ‘minor’ to ‘adult.’ You can open one account per individual at any post office, government bank, or select private banks throughout India, with a minimum monthly deposit ranging from Rs 100 to Rs 500.
You can open an account at a bank or post office
To set up a PPF account, you need to complete an application form and submit it to your chosen bank or the nearest post office. You will also need to provide KYC documents, which include a copy of your Aadhaar card, proof of address, and a passport-sized photograph. Additionally, you can open a PPF account directly with your bank, ensuring KYC compliance, either online or via mobile banking.
It is important to note that only one account is allowed per person. The initial term of the account is 15 years, after which it can be extended indefinitely in five-year increments. During the extension period, you have the option to refrain from making further contributions. Notably, each extension is not automatic; once the account reaches its expiration, you must submit a request to the bank or post office to continue the account for another five years.
You can invest up to Rs 1.5 lakh annually in your child’s PPF account. You are eligible for tax exemption on this amount under the old tax regime. As per PPF rules, the total tax-free contribution per financial year is Rs 1.5 lakh, and this includes the amount deposited in your own and your child’s accounts. Therefore, the total contribution to a minor’s PPF account in a year cannot exceed Rs 1.5 lakh, whether the contribution is made by one parent or both parents/multiple guardians. The PPF Calculator allows you to easily calculate returns.