Public Provident Fund, or PPF, was launched in 1968. Since then it has earned the trust of generations. Significantly, parents or legal guardians can open a PPF account for a minor and operate it on his/her behalf.
PPF investment: No age restriction for minors
There is no restriction on the minimum age of a minor to open a PPF account.
PPF account for a minor can be opened at any post office or branch of selected banks. It is backed by the government of India and, therefore, is a safe mode of investment. Currently, it offers an interest rate of 7.1%.
In order to open a PPF account for a minor, KYC (Know Your Customer) documents of both the minor and the guardian opening the PPF account are mandatory. Proof of age of the minor must also be submitted.
PPF account documents required
The following documents are needed: Birth certificate or Aadhaar card to serve as age proof of the minor.
Aadhaar, PAN, or Passport, Voter card or Driving License of the parent/legal guardian.
Passport-size picture of parent/guardian.
Mention details of the minor and guardian in the account opening form.
A cheque for a minimum amount of Rs 500.
Closing PPF account of minor
The lock-in period of a PPF account is 15 years. Premature withdrawal from a PPF account or closure is possible though it is not encouraged.
One can close a PPF account in the name of a minor after 5 years of opening it if the money is needed for medical treatment of the account holder.
Premature closure of a minor account is also allowed if the accumulated funds are used for higher education of the account holder. But it can be done only after the expiry of 5 years from the date of opening of the account.
Proof of both medical treatment and higher education have to be submitted.
The deposit is income tax deductible under Section 80C of the Income Tax Act 1961. Therefore, the maximum amount that one can invest to get income tax benefits in the minor’s PPF account is Rs 1.5 lakh a year.
If a PPF account is opened soon after birth, it can accumulate a significant pool when the minor turns an adult. But the money can be withdrawn prematurely only in certain situations. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
