According to the rules of Public Provident Fund ie PPF, you can open an account in the name of yourself and your child. Every parent must open a PPF account in the name of their child. It has many advantages. It has a lock in period of 15 years. Suppose you open a PPF account for a child at the age of three, then it will mature when he turns 18.
Public Provident Fund ie PPF is a small savings scheme. PPF is called a scheme with triple tax benefit. In this you get guaranteed and tax free returns. Along with this, income tax exemption is also available. PPF has remained a preferred investment vehicle for many investors over the past few decades. The biggest reason for this is the benefits of investing in PPF account. In this, you can also open an account in the name of your child. Let us know how to open PPF account and what are its rules and benefits…
Account for minor
If you want, you can also open a PPF account in the name of your minor child. However, it will be the child’s account only, you will only be the guardian. An account can be opened for each of your children or either of the mother or the father can open an account with any of their children. Grandparents cannot open a PPF account for a child when his or her parents are alive. Yes, if the parents have appointed the grandparents as the legal guardian of the child, then after the death of the parents, the grandparents can open the PPF account for the children.
what would be the advantage
The biggest advantage of PPF is the lock-in period of 15 years. As soon as your child becomes an adult, the operation of the account will go into his hands. That is, his signature will be required to deposit or withdraw money. In this way he will have the freedom whether to close the account or continue further. He can extend it for five years. That means there will be no hassle of 15 years lock in period for him. However, in a year, you can invest only Rs 1.5 lakh in total in your and your child’s account.
how much is the interest rate
The interest rate in PPF is not fixed but is linked to the government bond yield with a tenure of 10 years. The government sets the interest rate for PPF every quarter based on the yield (return) received on its securities. There was 4% interest on PPF in 1968-69, then between 1986-2000 the interest rate increased to 12%. It has been fixed at 7.10 per cent for the first quarter of this financial year. There has been no change in it for a long time.
Deposit limit
To keep the account active, a minimum of Rs 500 has to be deposited in the account annually, while a maximum of Rs 1.5 lakh can be deposited in a financial year (April to March). If you have opened accounts in your name as well as your child’s name, then the maximum investment amount in all the accounts together will remain Rs 1.5 lakh only. If you put more than the annual limit of Rs 1.5 lakh in PPF account, then you will not get interest on the extra amount and you will not be able to take tax exemption on it under section 80C. This amount will be returned to you without interest.
Can also take loan
You can also take a loan against your PPF account and withdraw some part of the deposited amount. Now the facility to close the PPF account before maturity has been given. However, this may be permitted in certain cases after completion of at least five financial years from the date of opening of the account. For example, this can be done for the treatment of serious or life-threatening diseases of the account holder, his spouse, child or parents and for the higher education of the account holder etc.
How to open PPF account
The government has empowered some post offices and some banks to open PPF accounts. You can open your account by visiting these designated post offices or bank branches. Some banks are also providing online account opening facility. In such banks, you can open PPF account even sitting at home. There is no nominee column in the PPF application form (Form-A), so if you want to make a nominee, you must fill Form-E while opening the account.
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