Benefits & Process for Having PPF Account for Children at an Early Age

Investment is the key to growing money. Banks help you keep your money safe, but if you want to double or triple your money, then just keeping it in a savings account isn't going to help. Share market is not everyone’s cup of tea, given its volatility. So, where does the more conservative investor go?
Both Government of India, as well as, Public Sector Financial Institutions, offer the facility of various saving schemes for such investors. Some of the most popular saving schemes are:
  • Public Provident Fund
  • National Savings Certificate
  • Kisaan Vikas Patra
  • Post Office Savings Account etc.
These saving schemes are popular because of their low risk and security factor. They are awesome tools for investing money for long-term future goals such as your children's education, marriage, retirement, etc.
Let us talk about the most popular saving scheme, PPF.
What is PPF?
Public Provident Fund or PPF is a long-term saving scheme, which was launched in the year 1968 by the Finance Ministry’s National Savings Institute. Due to its returns, tax benefits, and safety, it is one of the most popular saving schemes brought by the Government of India. The backing of the Government of India makes it the most secure and guaranteed risk-free return.
Key Features of PPF:
  • The tenure or duration of the Public Provident Fund Scheme is 15 years.
  • The interest rate is 7.1% which is compounded annually. The Ministry of Finance, Government of India announces the rate of interest for PPF account every quarter.
  • The interest rate is compounded annually and paid on 31stMarch every year. Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.
  • The EEE status of PPF, makes the amount that has been invested, the interest earned on the amount, and the amount received, all tax-free. EEE means your money is exempted from taxes at the time of investment, accumulation and withdrawal.
  • One can open an account for as little as Rs 500 and invest up to 1.5 lakhs per annum.
  • The maturity amount will depend on the investment tenure of the PPF.
  • There is no age restriction to open a PPF account.
PPF for Minors / Children:
As there is no age limit for opening a PPF account, it is a secure and extremely low-risk way to invest for long-term future goals of the children like their education, marriage, etc.
It is recommended, that parents open a PPF account for their children right after their birth. The reason for this is the long-term locking period of 15 years. At the interest rate of 7.1, getting compounded annually, PPF gives very healthy returns when the child grows up. In such cases, of course, the KYC details of the parents are used.
In the case of minors, there is a joint account with the parents.
It is always recommended that the account be opened early on in life rather than later, to get the maximum benefit out of PPF. For later stages in life, there are other Saving Schemes which one can invest in.
Process for opening PPF Account for the Minor:
  • The PPF form has to be duly filled with the details of the child as well as parents or the guardian.
  • KYC documents are needed for ID Proof and address proof of the child and the parents or of the guardian. This will include PAN Card, Adhaar Card, Passport, etc.
  • Photograph of the parent or the guardian will be needed.
  • Age Proof of the minor i.e. the birth certificate.
  • The initial investment has to be done via cheque and it is only Rs 100.
With just these simple steps, you can open a PPF account for your child and ensure a secured future for him/her.
If your Adhaar card is linked to your bank account, the PPF account will get activated in just one day.
Points to Remember for Minor’s PPF Account:

  1. The depositing lower limit of RS 500 p.a. and upper limit of Rs. 1.5 lacs p.a is the same for an adult as well as a minor's PPF account.
  2. The parent and child together can have an upper limit of 1.5 lacs in total in the PPF account. It will not be counted separately, like Rs 1 lac for the parent and Rs 1 lac for the child.
  3. The reason for sticking to Rs 1.5 lacs is also because this slab comes under the tax exemption of Section 80 C.
  4. Once the child turns 18 years, the account can be transferred to his / her name by applying to the post office or the bank, wherever the account had been opened.
  5. Complete withdrawal of the amount is allowed only after the completion of 15 years of tenure. Partial withdrawal can be done after 7 years. In such a case, proof needs to be submitted that the funds were withdrawn for the child's benefit only.
  6. In case there is an emergency related to health issues or education, the account can be closed after 5 years. Even then, proper documents need to be submitted to verify the reasons.
Is PPF Account for Your Child the Right Choice?
Considering all the above-mentioned points, Public Provident Fund Scheme is the best option to go for your child’s security and long-term goals. The super-easy procedure of opening the account, basic documents, a minimum amount of Rs 500 makes it accessible to all category of people. If you open an account for your child right after birth, you will have 15 long years to invest in your child's secured future. With the stamp of a government saving scheme and with no stress of the volatility of the market, you can have tension-free nights & get sound sleep!
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Good article, but don't use any links in your article. The next time it will be deleted and you will be banned as a spammer. This time I have taken the trouble of editing your article.

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