PPF Update – Open This Account in Your Child’s Name for Strong Annual Earnings, Know How?

New Delhi: In today’s times, everyone desires to invest in their children’s names to ensure their future is financially secure and prosperous. While there are numerous schemes available for investing in a child’s name, the Public Provident Fund (PPF) stands out as the best option. Through this scheme, one can easily invest and take steps to build substantial wealth for their children.

key highlights

🎯 Why PPF Is the Best Investment for Children

👨‍👩‍👧‍👦 Account Opening Rules — Who Can Open What

Currently, this scheme offers an annual interest rate of 7.1%. By opening a PPF account in your child’s name, you can easily accumulate a corpus amounting to lakhs of rupees for them. However, there are certain essential rules associated with this process. We are here to outline some of these key regulations for you.

How ​​Many Accounts Can One Person Open?

Did you know that an individual is permitted to open only one PPF account in their own name? In addition to their personal PPF account, an individual may open one additional PPF account in the name of a minor child. This implies that a single guardian can open a PPF account for only one child.

According to government regulations, if an individual has two children, the PPF account for one minor child may be opened by the mother, while the account for the other minor child may be opened by the father. Furthermore, specific rules and regulations govern the investment process within these accounts.

How ​​Much Can Be Invested in a PPF Account?

In a PPF account opened in the name of a minor child, one can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh within a single financial year. If the parents also hold their own individual PPF accounts, the combined maximum deposit limit across both their personal accounts and the minor’s account remains capped at ₹1.50 lakh per annum.

Can the Account Be Managed Independently Upon Turning 18?

Once the minor child attains the age of 18, an application must be submitted to change the account’s status from ‘Minor’ to ‘Major.’ Subsequently, the now-adult child can manage their PPF account independently.

What is the Maturity Period?

The maturity period for a PPF account is 15 years. Upon maturity, you have the option to withdraw the entire accumulated amount. If, for any reason, you do not require the funds, the scheme can be further extended in blocks of five years.

Benefits of Tax Exemption

The PPF falls under the ‘EEE’ (Exempt-Exempt-Exempt) category for income tax purposes. You are entitled to tax exemptions on the entire amount invested in the scheme. Furthermore, neither the interest earned on the investment nor the entire invested principal amount is subject to any form of taxation.