Understanding PPF Accounts for Minors: A Guide for Parents
Can a parent open a PPF account for a child? Process, tax rules explained
Business Standard
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Parents can open a Public Provident Fund (PPF) account for their minor children, allowing for long-term savings towards future expenses like education. The account is managed by a guardian until the child turns 18, with specific rules on contributions and withdrawals. Understanding these regulations is crucial for effective financial planning.
- 01A PPF account can be opened for a minor child by a parent or legal guardian, but only one account is allowed per child.
- 02The total annual contribution limit for both a parent's and child's PPF accounts combined is ₹1.5 lakh (approximately $1,800 USD).
- 03Parents can open a minor PPF account at authorized banks or post offices, with required documents including the child's birth certificate and the guardian's Aadhaar card.
- 04Partial withdrawals from the PPF account are allowed after a certain period, and loans can be taken against the balance after a few years.
- 05Financial planners suggest that while PPF is a stable investment option, parents may also consider combining it with market-linked products for better growth.
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The Public Provident Fund (PPF) is a government-backed savings scheme that allows parents to open accounts for their minor children, facilitating long-term financial planning for education, healthcare, or marriage. A parent or legal guardian can manage the account until the child turns 18, at which point the child must submit new KYC documents to continue operating the account independently. Parents can only open one PPF account per child, and contributions to both their own and the child's accounts cannot exceed ₹1.5 lakh (approximately $1,800 USD) annually. The scheme offers tax benefits under Section 80C and tax-free maturity proceeds, making it attractive for conservative investors. The account has a 15-year lock-in period, but partial withdrawals and loans against the PPF balance are permitted after a few years. While PPF is a safe investment, financial advisors recommend considering a mix of PPF and market-linked products to optimize returns, especially in light of inflation and long-term financial goals.
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Opening a PPF account for children allows families to secure future educational and healthcare expenses through disciplined savings.
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