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PPF Account for Minors

5paisa Research Team

Last Updated: 28 Dec, 2023 03:22 PM IST

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PPF account for minors is among the most reliable and time-tested investment schemes for Indian citizens. The most attractive feature of this scheme is its minimum deposit amount and that it is exempted from tax. Moreover, the interest one earns from this scheme is also exempted from tax. It implies that the scheme holder is likely to get higher returns than any other investment scheme. In this post, you will learn everything about opening a PPF account for minors, from its objectives and features to the application procedure and things to consider.

What is a PPF Account for Minors?

PPF account for minors is currently the most popular Indian government-sponsored long-term investment scheme. It enables the Indian residents to invest long-term and build a corpus. Every eligible Indian citizen is only allowed to register one PPF account, according to the guidelines. On the other hand, a parent can register a PPF account for their minor kid as their legal Guardian, which can fund the minor's higher education or marriage. 

Objective of PPF Account for Minors

The following are some of the objectives of a PPF account for minors:
• To encourage young people for saving money.
• To provide tax-free investment returns and establish a long-term fund for the child's future expenses.
• Making good use of the tax benefits granted by the 1961, Income Tax Act’s section 80C.

Features of PPF Account for Minors

The PPF account for minors has unique features, making it an attractive saving scheme. 
• Each person can only have one PPF account.
• Anyone, incuding minors, may not have more than one PPF account.
• When a minor opens a PPF account, their parent or Guardian may act on their behalf.
• The option of joint accounts is not accessible for PPF accounts.
• Only one Guardian may open a PPF account for a minor.
• The funds can be deposited into a PPF account as a one-time lump sum payment or in instalments.
• A PPF account has a maximum deposit of Rs.150,000 and a minimum deposit of Rs.500.

PPF Age Limit for Minor Account

There isn't any minimum age limit for minors for creating a PPF account. Both adults and minors are eligible for opening this account. Nevertheless, if any child is below 18 years, their Guardian may be responsible for handling the account on the child's behalf until the latter reaches eighteen years of age. 

Minor PPF Account Rules and Eligibility

To qualify for opening a Public Provident Fund account for any minor, these criteria must be satisfied:
• Indian residents are eligible to open a PPF account and enjoy tax-exempted returns.
• Only one Guardian is allowed to open the account.
• The person managing the PPF account on the minor’s behalf who should be a legal guardian.
• Grandparents cannot operate the PPF account for the minor unless they become legal guardians after the parents' demise.
• During the PPF account opening, a nominee should be registered.
• The individual may contribute minimum 500 rupees and a maximum 1.5 lakh rupees to the minor's PPF account in a fiscal year.

Documents Required to Open a Minor's PPF Account

To open a PPF account for minors, submitting these documents is mandatory:
• Age verification for the minor can be established through documents such as the Aadhar card.
• The legal Guardian of a minor must submit a KYC document containing identity proof (passport size) and address proof. Acceptable identity proofs include a PAN card, Aadhar card, driver's license, or similar documents.
• Submission of a PPF form containing comprehensive details about the minor and the Guardian is mandatory.
• An initial contribution must be made to your PPF account, and a corresponding verification is necessary for this transaction.
 

Things to Know Before Opening PPF Account for Minors

• Opening a PPF account for minors requires a minimum 100 rupees initial deposit. However, the annual contributions must range between a minimum of 500 rupees and a maximum of 1.5 lakh rupees.
• Suppose the funds invested in a minor's PPF account originate from the income of the parent or Guardian. In that case, such amounts can be considered under 1961, Income Tax Act’s section 80C, making them eligible for the tax benefits.
• When the minor reaches 18 years of age, applying for transferring the account from the legal Guardian to the minor is mandatory. This application should include the necessary documents and bear the signature of the depositor, now a major. Additionally, the Guardian who opened the account should attest to the application.
• Closure of the PPF account for minors is permissible under specific conditions but only after five years. This closure is sanctioned because the withdrawn amount will be used for the medical needs of the account holder.
• Furthermore, premature closure of the minor's PPF account can occur if the funds are utilised for the minor's higher education.

How to Apply for a PPF account for minors?

The steps to initiate the opening of a PPF account for minors are outlined below:
1. Visit a bank or post office that provides PPF account services.
2. Complete the PPF account form, providing essential details about the minor.
3. Furnish KYC documents for both the parent or Guardian and the minor.
4. Make an initial deposit of Rs—100 into the PPF account.
5. Submit required documents, including the minor's birth certificate, to validate the age during the application process.

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Frequently Asked Questions

There is no age limit constraint for opening a PPF account for minors. Nevertheless, the management of a minor's PPF account can only be undertaken by a parent or Guardian until the account holder reaches the age of 18.

A PPF account for a minor can be initiated with a minimum deposit of Rs. 100. Nonetheless, irrespective of the number of accounts, the maximum annual investment allowed in a family's PPF accounts is Rs. 1.5 lakh.

Upon the minor reaching 18, the legal guardian of the minor PPF account holder is required to apply for a change in status. The account holder should manage subsequent transactions personally. The account holder must then submit an updated application, including their signature, the necessary documents to be attested, and the application form.

Partial withdrawals from the PPF account of a minor are permissible, but only after the 7th year from the account's opening. Furthermore, the Guardian is obligated to provide a declaration affirming that the withdrawn funds are intended solely for the benefit of the minor.

The closure of a minor's PPF account by a legal parent is restricted to specific situations, such as funding medical treatment for the account holder. A closure request can only be initiated after the account has been open for at least 5 years.

The government-supported Public Provident Fund (PPF) is the ideal choice. For families aiming to establish funds for their children's well-being, initiating a PPF account on their behalf is one of the most effective ways to accumulate resources for future expenditures. Whether earmarked for higher education, marriage, or as a contingency fund, a PPF represents a straightforward and convenient investment option.

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