Understanding PPF Accounts for Minors: Benefits and Tax Implications
PPF for children explained: Can parents open an account for their child and claim tax benefits
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Parents can open a Public Provident Fund (PPF) account for their minor children, managed by them until the child turns 18. This investment offers government-backed returns, tax benefits under Section 80C, and tax-free maturity proceeds, making it an attractive option for long-term savings.
- 01A PPF account for minors can only be opened by a parent or legal guardian, not grandparents unless legally appointed.
- 02The combined contribution limit for a parent’s PPF and a minor's PPF is ₹1.5 lakh per financial year.
- 03Tax benefits on PPF contributions are only available under the old tax regime, not the new default regime.
- 04To open a PPF account for a minor, documents such as KYC for the guardian and proof of the minor's age are required.
- 05The account offers a 15-year tenure with tax-free returns and partial withdrawal options.
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The Public Provident Fund (PPF) serves as a valuable long-term investment for parents looking to secure their children's financial future. A PPF account can be opened in the name of a minor and is managed by a parent or legal guardian until the child reaches 18 years of age. This account provides several benefits, including government-backed returns, tax benefits under Section 80C, and tax-free maturity proceeds. Parents must note that the combined contributions to their own PPF account and their child's cannot exceed ₹1.5 lakh in a financial year. Tax deductions for PPF contributions are applicable only under the old tax regime, which may affect some taxpayers. To open a minor's PPF account, one must provide necessary documents like KYC for the guardian and proof of the child's age, along with an initial deposit of at least ₹500. This investment avenue is particularly favored for its disciplined savings approach, making it suitable for future goals such as education or marriage.
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The ability to open PPF accounts for minors allows parents to secure their children's financial future through disciplined savings.
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