PPF or public provident fund account is a very popular long term investment option among Indians even though per year maximum limit has been kept to Rs. 100000. You will not only get good return out of your invested money but you will also get tax deduction each year for the money invested in PPF account.
For this reason now a day every one wants to open PPF account to save tax and to get higher return.
In this article, we will be discussing provisions on PPF account for minor child. If you do not know the process for opening a PPF account then we suggest you to read our article how to open a Public Provident Fund account – its advantaged and disadvantages.
You will also know tax provisions for the investment that you do into the PPF account of your minor child.
Answer to the first question “can PPF account for minor child be opened” is YES. Public provident fund account can be opened for minor child. Now let us understand the provisions with the possible questions that come to a layman’s mind.
Who can open PPF account for minor child?
PPF account for minor child can be opened by a guardian. A guardian can be the child’s biological father or mother or any other legal person i.e. in case parents are not alive then uncle, ant, grandfather, grandmother etc can open PPF account for minor.
Even, if parents are living but are incapable then legal guardians can open public provident fund account for minor child.
Can I open PPF account for minor child after having one PPF account in my own name?
A resident individual can open one PPF account in his or her name. When you as a guardian open a PPF account in your minor child’s name, you maintain it under the guardianship as a parent.
So there is no restriction that you can not open PPF account for your minor child if you already have one in your name. The answer to this question is YES, you can.
But either the mother or father can open PPF account for the minor child. Both can not maintain two accounts for their minor child.
Minimum and Maximum Investment Limit for the guardian
Maximum investment limit for the money that you want to invest in PPF account for minor child and in your own PPF account is Rs. 100000 i.e. investments in both the accounts can not exceed 1 lakh rupees.
If you invest more than one lakh then interest on the excess amount will not be paid to you. Minimum limit is Rs.500.
Tax benefits for the guardian
The guardian will be eligible for tax deduction for the amount invested in both his or her own PPF account and minor child’s PPF account.
Deduction is allowed under section 80C of income tax act. As per this section, your tax deduction limit for investing in PPF account including money invested in minor child’s PPF account should be eligible up to a maximum amount of Rs. 100000 as tax deduction along with other investments listed there in.
What happens at the time of maturity of Public Provident Fund Account
Maturity may arise before the minor child attains 18 years of age or after that. In the first type of situation when its matured before the child attains 18 years of age then the guardian can withdraw all the money or can extend the period of investment for another 5 years.
When investment in public provident fund account matured after the child become a major then the entire income will be received by the child in whose name the PPF account has been opened.
In both the case, at the time of withdrawal you and the child are not required to pay any tax.
Other specific requirements while opening PPF Account for minor child
The guardian of minor child has to give a declaration in the public provident fund application stating all the PPF accounts that is held by him in his own name or as a guardian for their other children.
In addition to normal documents that are required for opening PPF account for minor child you are also required to submit proof of age of the minor child like birth certificate or school certificate.
If you have already invested 100000 in your own PPF account and wanted to invest in minor child’s PPF account for their higher education or marriage then we suggest you to open it in your spouse’s name so that his or her investment limit will be 100000 rupees and tax deduction in her name can also be claimed.
To know complete document requirements and other procedures for opening public provident fund account, we kindly request you to read our article on how to open a Public Provident Fund Account – Advantages and disadvantages.