10 things to know about your child's PPF account
A PPF account can be opened in a child’s name as a guardian of the child.A PPF account cannot be opened in joint names.
PPF or Public Provident Fund is a well-known small savings scheme that offers income tax benefits under Section 80C. It is also a useful mechanism for long-term savings since both interest and maturity are tax-free. An individual can open a PPF account with the name of a child as guardian of the child. But remember that a PPF account cannot be opened in joint names. When the minor turns 18, he/she can operate the account. Loans and partial withdrawals from the child's account are also allowed.
10 things to know about a PPF account in the name of your child:
1) An individual can open a PPF account in the name of the child with an initial amount of a minimum of ₹100. The minimum amount to be deposited in a year is ₹500, and the maximum is ₹1.5 lakh.
2) If the parent already has a PPF account in his/her name, the maximum amount that can be deposited in parent and child's account is ₹1.5 lakh per year.
3) If the amount invested in the child's PPF account comes from the parent/guardian income, the parent/guardian can include it in Section 80C of the Income-tax Act to obtain income tax benefits.
4) When the child turns 18, an application can be sent to change the status from minor or major. He/ she can operate the account.
5) The depositor can submit a revised application along with the required documents and depositor's signature who turned major must be attested on the reviewed application form by the guardian who opened the account.
6) Partial withdrawals can be made by the depositor from the PPF account, beginning from the seventh year. If the withdrawal of the child's PPF account is sought, the guardian must make a declaration that the money is needed for the child's use.
7) In particular cases, the depositor can also close the child's PPF account of whom he is the guardian.
8) The request can be made only after completing five years because the amount is needed for the medical treatment of the account holder when presenting the supporting documents of the competent medical authority.
9) A child's PPF account can also be closed prematurely after five years of opening the account if there is a need for the child's higher education.
10) Loans from the child's PPF account are allowed if the guardian makes a declaration that the money is needed for the child's welfare.