The Publlc Provident Fund (PPF), which is deemed among the most popular investment options for many investors, help with tax savings as well as long-term wealth creation. In fact, not only adults but even minors can open a PPF account. A minor's PPF account can be opened for as little as Rs. 500. However, regardless of the number of accounts, the maximum amount that can be deposited in a family's PPF accounts in a financial year is Rs. 1.5 lakh. The account must be managed by the guardian before the minor reaches the age of 18. To be eligible to open a PPF account for a minor, the below conditions must be satisfied:
Eligibility required to open a PPF account on behalf of a minor
- An individual can open one account for each minor or person of unsound mind over whom he or she has guardianship.
- A legal guardian should be the person who manages the account on behalf of the minor.
- However, each guardian can only open one account in the name of a minor or a person of unsound mind.
- After the death of the parents, the grandparents of a minor child can only manage a PPF account if they are legitimate guardians of the minor.
- A nominee can also be declared while opening a PPF account on behalf of a minor.
- In a fiscal year, an individual can contribute a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh to the minor's PPF account.
Documents required to open a PPF account on behalf of a minor
At a post office or a specified bank branch, one can open a PPF account on behalf of a minor. To open an account, the individual will be required to submit the below listed documents:
- The required details of the guardian and minor should be filled out on the account opening form.
- The guardian's KYC documents, as well as a photograph, must be attached to the application form and submitted at the concerned bank or post office.
- Aadhaar card or birth certificate of the minor child as a proof of age must also be submitted.
- Initial contribution to the PPF account.
Points to keep in mind while opening a PPF account on behalf of a minor
While opening a PPF account on behalf of a minor, keep the following facts in consideration.
- A minor's PPF account can only be managed on his or her behalf by a parent or guardian until the account holder reaches the age of 18.
- In case the contribution put into the minor's PPF account comes from the parent's or guardian's income, it will be counted in Section 80C of the Income Tax Act and qualify for tax deductions.
- A minor's PPF account can be closed by a parent or guardian prematurely for the account holder's higher education or treatment of life-threatening disease.
- An individual can make partial withdrawals from a minor's PPF account starting in the seventh year when the account was opened.
- Except under exceptional circumstances, such as the account holder's medical attention, a parent or guardian can close a minor's PPF account. He or she can only raise a request for the account to be closed after five years have passed since the account was opened.
- In the case of an account opened on behalf of a minor or a person of unsound mind, the guardian can apply for a loan on the minor's or person's behalf.
- At the request of the guardian, an account opened on behalf of a minor or a person of unsound mind can be extended.
A depositor or account holder can contribute a maximum of Rs 1.50 lakh to his or her PPF account, as well as the minor's PPF account. There is also a cap of Rs. 1.50 lakh that can be deposited in a single PPF account. As a result, your contribution to the PPF account of your one minor child, made jointly by you and your wife, should not surpass Rs 1.50 lakh. If you want to seek the tax benefit under Section 80C, the cap of Rs. 1.50 lakh relates to contributions made to your minor child's PPF account.