PPF Account for Minors

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Public Provident Fund (PPF) is a popular saving scheme that is long term investment that offers income tax benefit under section 80C of the Income Tax Act, 1961. Any resident individual can open the PPF account. You can also open a PPF account for your children. Opening PPF account is a small investment for your child at an early age for his/her future financial needs.

 

PPF Account for Minors

PPF for minors comes with a 15-year lock-in period and can be renewed in blocks of five years. Therefore, when your child becomes major or adult, their account has matured or close to maturity. Let’s understand the eligibility, documents required and how to open PPF account for Minors. 

The applicable interest rate on PPF for the first quarter of 2020-21, i.e. from 1st April to 31st June 2020 is fixed at 7.1%.

Eligibility to open PPF Minor accounts

  • The natural guardians (Father or Mother) can apply to open and operate the Minor’s PPF account. In the absence of natural guardians, legal guardians can open the account.
  • Only one guardian, either mother or father, can open the account. Both are not allowed to open the account simultaneously of the same minor.
  • The grandparents for the minor child can’t open the PPF account unless they are legal guardians after the death of the parents.

Note: There is no age restriction for opening a PPF account for a minor child. Guardians can even open it for the newborn baby.

Change of status from Minor to Major

When the minor turns the age of 18 years during the lock-in period, he/she has to submit an application to change the status from minor or major. Afterward, the major can handle the accounts.

Amount of the deposit in PPF account

The guardian of a minor can open a PPF account in the name of the child with an initial amount of a minimum of Rs. 500 and maximum Rs. 1.5 lakh in a financial year.

Benefit of Income-tax 

Interest accrued and the maturity amount of PPF is tax-free in the hands of the account holder. Moreover, if the parent/guardian invest amount in the minor’s PPF account from their own income, then the parent/guardian can claim the deduction under Section 80C of the Income-tax Act in their personal return. 

Note: In case the individual and guardian of minor have separate PPF accounts, then the combined maximum deduction allowed is Rs. 1.5 lakh.

How to open PPF account for Minors?

PPF account can be opened with a post office or authorized bank branches. The guardian has to fill the PPF account opening form along with his details. The form should have the following documents:

  • Account opening KYC documents of the guardian with a photograph
  • Age proof of the minor child (Aadhaar card or birth certificate)
  • Cheque of Rs. 500 or above for initial contribution to open the PPF account 

PPF Maturity Period

A PPF account matures within 15 years from the year from the date of account opening. However, the account holder has the option to either renew it for a block period of 5 years after the maturity period without making a further contribution. He/She can choose to or close the account and withdraw the money.

Partial Withdrawal of PPF amount

A depositor can make partial withdrawals from the PPF account after completing six years from the opening of the PF account. The withdrawal is allowed up to a maximum of 50% of the amount available in the account at the end of the 4th year.

Premature closure from PPF account

Premature closure from PPF account in the name of a minor is allowed only after the account has completed five years and under special circumstances such as: 

  • Amount required for treatment of serious ailments or life-threatening disease of the account holder, spouse, or dependent children, or parents, on the production of supporting documents from a competent medical authority.
  • Amount required for the higher education of the account holder or the minor account holder, on the production of documents stating the confirmation of admission in a recognized institute of higher education in India or abroad.

For availing the premature closure, the guardian will have to submit a written application to the Account Office.

Summarized table of withdrawing amount from PPF account:

Withdrawal TypeTime PeriodGrounds of withdrawalAmount allowed to withdraw
On MaturityAfter 15 yearsAnyFull Amount
Partial WithdrawalAfter 6 yearsAny50% of amount
Premature ClosureAfter 5 yearsSpecific grounds of Medical, EducationFull Amount

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