In one of earlier posts, we had pointed out how you can use your Public Provident Fund (PPF) investments to work as an excellent pension tool. PPF maturity and extension rules lend immense flexibility to the investors. However, a PPF account can be much more than a retirement savings and pension tool. Given the flexibility and tax benefits PPF investments enjoy, PPF is a great tool to save for your children’s education and marriage too. In this post, we discuss whether you should open a PPF account for your children and the associated deposit restrictions and benefits.
How can you open PPF account for your children?
A parent/guardian can open an account for his/her minor children. Either parent can open the account in the name of a child. However, both cannot open in the name of same child. You can open PPF account with a post office. Alternatively, you can open a PPF account with any prescribed public sector bank (SBI, Union Bank, PNB, IDBI etc) or a few private sector banks (ICICI Bank and Axis Bank). You can enjoy tax deduction for investment into PPF accounts (of self, spouse and children) up to a maximum of Rs 1.5 lacs per financial year under section 8C.
Maturity, Withdrawal and Extension rules for PPF Account
A PPF account matures in 15 years (after the end of financial year in which the account was opened). You can withdraw the entire amount after 15 years or extend your account in blocks of 5 years any number of times. The account can be extended with or without contribution.
Before the completion of initial maturity period of 15 years, premature withdrawals can be made after expiry of five years from the financial year in which the initial subscription was made i.e. if the account was opened in January 2005, you can do premature withdrawal from April 1, 2010. The maximum amount that can be withdrawn prematurely is capped at 50% of the PPF account balance (four years prior to year of withdrawal) or the PPF account balance in the preceding financial year, whichever is lower. In example given above (from April 1, 2010), you can withdraw 50% of balance amount as on March 31, 2007 or 50% of the balance amount as on March 31, 2010, whichever is lower. From April 1 2011, you can withdraw 50% of balance amount as on March 31, 2008 or 50% of the balance amount as on March 31, 2011, whichever is lower.
Withdrawals rules are different in the two extension cases. In case of extension with contribution, you can withdraw 60% of the PPF balance at the time of maturity in the next five years. In case of extension without contribution, there is no restriction on withdrawal. However, in either case, only one withdrawal is allowed per year. For detailed information about PPF extension and withdrawal rules, you can go to the following post. You can see withdrawal rules are more lenient after first maturity of 15 years.
How much can contribute to PPF account?
As per PPF rules, you can deposit a maximum of Rs 1.5 lacs per year in your account (including any account, where you are the guardian). Many people deposit more than Rs 1.5 lacs in a financial year. For example, they will deposit Rs 1.5 lacs each in their account and their minor child’s account. That takes the total deposit to Rs 3 lacs in a financial year. As per PPF rules, the total limit is Rs 1.5 lacs. Even bank officials are not clear about this. Till now, due to lack of technological advancement, tracking was not easily possible. However, with PAN becoming mandatory for investments, tracking may be possible. Since the limit is Rs 1.5 lacs and you make a declaration that you won’t deposit more than the limit in a financial year, you may not even get the interest on the excess deposit (You can check any PPF account opening form to verify the same. You can review Page 1 of ICICI Bank PPF account opening form). Though you may not be caught, you must be aware that you are going against the PPF rules if you deposit more than Rs 1.5 lacs.
We advise readers to limit contribution to their PPF account (and their children’s account) to Rs 1.5 lacs per financial year. However, there is a way through which you can contribute more to your PPF savings. Suppose you have two kids, you can act as guardian for one of the kids while your spouse can be guardian in your other kid’s PPF account. This way, you will be able to get Rs 3 lacs into PPF savings every year. Not just that, both you and your wife can enjoy tax deduction for Rs 1.5 lacs each.
If you can’t deposit more than Rs 1.5 lacs, why should you open a PPF account for your child?
You can argue this point. If there is no additional benefit (tax benefit or extra deposit in PPF), why should you open an account in the name of your child? Let’s discuss a few reasons.
You can earmark those investments (child’s PPF account) towards their education or marriage. Moreover, the utility of children’s PPF account does not end with completion of their education or marriage. You can extend the account with contribution and they can take over when they start earning. You can argue they can open an account themselves once they start earning. However, if they open an account after they start earning, their PPF account will offer very limited withdrawal options in the first 15 years. If you open their PPF account when they are quite young, they will have lesser restrictions in withdrawal and shorter lock-in periods for their investments in PPF account. Your children can use the same account for their retirement planning.
When your child grows, his/her investment will have a lock-in period of maximum 5 years. After the initial maturity period of 15 years, the account is renewed only in blocks of 5 years. Hence, any further deposits in the PPF account (after initial maturity of 15 years) will have a maximum lock-in of 5 years. Moreover, withdrawal rules are relatively lenient after the first maturity period of 15 years.
An additional point to note is that amount invested in PPF account in first year is locked for 15 years while the amount invested in the second year is only locked in for 14 years. Similarly, the amount deposited in the 13th and 14th years will be locked in for 3 and 2 years respectively. So, you can keep the account (your children’s account) alive in the initial years and you can increase your contribution towards the latter years. By doing so, your investment can earn tax-free interest in the latter years and with much smaller lock-in period.
If every member of your family has a PPF account (self, spouse and children), you get much more leeway in managing your PPF corpus. It is fair to assume not all accounts would have been opened at the same time. Hence, those accounts would mature at different times. If you foresee any medium term requirement for funds, you can increase allocation to PPF account which is closer to maturity (15/20/25 years and so on). At maturity, you can choose to withdraw or extend (with or without contribution) depending on your requirement. Hence, the more PPF accounts your family has, the better it is. Please note any individual can open just one PPF account under his/her name.
PersonalFinancePlan Take:
PPF is one of the best and most tax-efficient debt products available to investors. We have shown you a few ways to leverage PPF investments to suit your financial needs better. However, withdrawing from the PPF just because the rules let you do so is not a wise decision. Investment discipline is very important. If you are saving for your retirement through PPF, then regular withdrawals from the account may not leave you with enough funds at the time of retirement.
We also do not mean that your entire savings/investment for children education and marriage should be in your PPF account. Diversify your investments properly. Investors must keep in mind returns on PPF account may not be able to beat inflation over the long term. Keep a simple rule in mind: For long term goals, the portfolio should be equity heavy and for short term goals, the portfolio should be debt heavy. However, a PPF account can play an important role in meeting both long and short term financial goals. Depending upon the nature of the goal, the allocation and usage will change. If you use the PPF account in a smart way, you can give your children head start in financial planning. So don’t wait for too long, go ahead and open PPF account for your children.
Deepesh is a SEBI registered Investment Adviser and Founder, www.PersonalFinancePlan.in
209 thoughts on “Why you should open PPF account for your children?”
Very informative post Deepesh!!! The deposit limit in PPF account is a grey area. Even bank officials have told me there is nothing wrong in depositing more than Rs 1.5 lacs combined in my and my children’s PPF account.
Now with your post, it is quite clear that I cannot deposit more than Rs 1.5 lacs. I checked the PPF account opening form online. It is quite clearly stated you cannot deposit more than Rs 1.5 lacs and there will be no interest given on excess deposits.
Would be great if you can attach an opening form or snapshot of the concerned clause in the form in this post. Would be really helpful for your readers.
Look forward to many such posts from you.
Dear Dipali,Online PPF account satnemett is exactly same as your savings bank account satnemett. Your PPF account satnemett showing the investment line item is your investment proof for income-tax purpose.
In all my earlier years, I have deposited more than 1.5 lakhs in ppf accounts ( combined for me and my daughters). Interest was accrued so far. But this year , there is a problem. Post office is not allowing me to deposit more than 1.5 lakhs. What should I do?
Hi Vimala,
You can’t deposit more than a sum of Rs 1.5 lacs in your account and in those PPF accounts where you are the guardian.
Assuming you are the guardian in both the accounts, you can’t deposit more than Rs 1.5 lacs in such PPF accounts.
Looks like the bank is correct.
Thanks Manisha!!! Glad you found the post useful. Yes, I agree this is a grey area. Even bank officials are confused about this. As you pointed out, there is no need to look further than the account opening form to find the answer.
That is a great suggestion. I have included an account opening form in the post.
Thanks for the suggestion!!!
I quote from the account opening form that you attached –
” iv) I also declare that I shall adhere to the ceiling on deposits as provided for by Central Government from time to time which is Rs. 1.5 Lac in a financial year at present in each of the following types of Public Provident Fund Account.”
It uses the word “each” which implies deposit limit in each of the account is 1.5 lac.I don’t understand why the so-called tax experts always tell otherwise.
Is there any written rule/proof about the limit ?
It is written in PPF Act.
I want to know whether i can pay towards my son ppf acc from Huf acc and claim tax benefit under 80c in huf acc
Yes
I have opened a PPF account in my mothers name. Also do have my own PPF account. So can i make contributions to my mothers PPF account through cheque from my own income or not?
Transferring money to your mother’s PPF account should not be a problem. As I understand, you can deposit cheque or do an electronic transfer from your bank account tocredit your mother’s PPF account.
However, please note contribution to a parent’s PPF account will not get you any tax exemption under Section 80C.
HI …..I HAVE A DOUGHT THAT I OPENED PPF ACCOUNT LAST MONTH [DECEMBER ] SO MONTHLY PREMIUM IS 12500INR . SO CAN I ABLE TO DEPOSIT 150000 THIS FINANCIAL YEAR [TILL MARCH ]LIKE 50000 A MONTH OR WE SHOULD NOT BEYOND THE PREMIUM FOR MONTH .
PLEASE REPLAY ME THANK U SIR .
Hi Raju,
There is no need to put the money every month in PPF account. You can put Rs 1.5 lacs at one go too.
There is no restriction that you have to deposit amount every month.
If you have put Rs 12,500 already, you can put the remaining Rs 1.375 lacs in the remaining months.
You can put Rs 50,000 or Rs 60,000 or whatever you want.
Just ensure you do not put more than Rs 1.5 lacs in a single financial year.
PLS END ME REPLAY TO NAG.RAJEEV@GMAIL.COM
THANK U AGAIN .
thank u deepesh for your kind help .
Can my mother avail tax benefit by contributing to his above 18 employed son’s(me) PPF account?
Yes, she can.
I am above 18 and employed. Can my mother avail tax benefit by depositing money in my PPF account.
Yes, she can avail tax benefit under Section 80C for investing in your account.
Please note both of you should not take tax benefit for the same investment in PPF.
So, if she is taking the benefit under Section 80C, you should not take the benefit for the same investment.
Can my mother avail tax benefit by contributing to his above 18 employed son’s(me) PPF account?
Hi Deepesh,
Nice and informative article.
Couple of queries/suggestions:
1) In addition to the sample ICICI PPF a/c opening form can you help with a hyperlink to a pertinent RBI or Central Gov. circular/notification that can confirm that the total contribution to PPF a/c’s in case of 2 PPF a/c’ one regular and one for a minor??
2) A banked once suggested that I can open another PPF a/c by getting a HUF PAN number. Can you please advise if this is correct/possible and if so then what the process that one needs to follow?
3) I believe that a PPF a/c cannot be opened/extended for an NRI. Can you please throw some more light on the nuances of PPF a/c’s for NRIs
Thanks in advance.
Thanks Kapil.
1. You can refer to PPF Act, 1968.
2. HUF are not permitted to open PPF account
3. Yes, NRIs cannot open PPF account. If opened before turning NRI, the account cannot be extended beyond maturity.
http://www.personalfinanceplan.in/product-review/all-you-need-to-know-about-ppf-account/
I have three PPF accounts, one in SBI for my self and other two as a guardian for my son and daughter in ICICI bank, My query is can I transfer guardianship of one the PPF account to my wife. Is there any provision for change of guardian from father to mother.
Dear Mr. Grewal,
Though there is nothing in the PPF Act that prevents change of guardian (when the current guardian is alive), I don’t know how to do it or if banks accept such requests. There is no specific form for this. Probably, a letter or undertaking signed by both of you will do.
You will have to check with the bank about the process.
In all likelihood, they will say No.
Typically, if they don’t know how to do it, they say its not allowed.
Thanks Sir, I have changed my mind regarding change of guardian for ppf account instead someone has suggested that for saving for girl child SUKANYA SAMRIDDHI Account is best with better returns than PPF account.The benefit of PPF for minor is when child becomes major it transfers to his/her name and now for tax free saving he/she has only 5 years lock in period.
Yes, Sukanya Samriddhi Account is a good option for a girl child.
Just that the account will terminate when your daughter gets married or 21 years from the date of opening account, whichever is earlier.
PPF, on the other hand, can be continued as long as you want.
1) I have ppf a/c in name of my both children. both are above 18 and one is employee and his income is not taxable income (about one lakh per annum. only)whenever other son went abroad for study. can I deposit money in both a/c and take tax benefit from both a/c.
2) upto what their age I can take benefit.
pl suggest me better.
1. Yes, you can do that. As per Section 80C of the Income Tax Act, tax benefit is not just limited to contribution to PPF accounts of minor children.
2. There is no limit.
Do ensure there is no duplication of tax benefit.
Great Write-up Deepesh !I have just come across this site and found information and your opinion quite useful.Thanks!
I would be happy to hear from you on this ..
As u’ve mentioned that investing above 1.5lacs actually implies violating the PPF rule , can I have an EPF account and a PPF account and together make contributions more that 1.5Lacs.Ex- 1lac in EPF and 1 lac in PPF ?Is this viable.?
reply me at: vineetagarwal86@gmail.com
Hi Vineet,
I am glad you have found the posts useful.
EPF and PPF are completely different. The only limitation is on investment in PPF.
In EPF, you can invest even 4 lacs. No one stops you.
So, yes you can invest Rs 1 lac in EPF and Rs 1 lac in PPF.
Thanks Deepesh and others for answers and comments. From the above I understand that it’s not possible to invest 4.5L/year in 3 PPF accounts: Self, wife and minor child. Is it correct? Is there any benefit of having wife as guardian of the minor child instead of self? Or in other words, is there a way to invest total of 4.5L/year in all the 3 PPF accounts?
Hi Rahul,
Glad you liked the post. Please do share with friends and family.
PPF Act is quite clear. You cannot invest more Rs 1.5 lacs (total) in the your account or those PPF accounts where you are acting as guardian. Since for your minor children, either you or your wife will be guardian, there is no way you can invest more than Rs 3 lacs per annum in PPF account.
Atleast, I cannot think of any way to invest more than Rs 3 lacs (in your, your wife’s and your child’s account).
There is no specific benefit in having wife as the guardian. However, to invest more than Rs 1.5 lacs (for the family), you need to invest in your wife’s account or in an account where your wife is the guardian.
Thanks a lot Deepesh. In that case, other than PPF and Sukanya (SSA), what are other DEBT instruments where we can invest LUMP SUM for a LONG TERM for a CHILD (I have marked keywords in CAPS!)?
You are welcome, Rahul.
PPF stands out in so many ways. SSY, although not as good, offers higher interest rate.
See, if you are looking for long term investments, then equity mutual funds is a good option.
However, with lump sum investments, it can get tricky. But if you are planning to invest more in the coming years, then you can invest lump sum. Then things will even out.
It should not be like…You want to invest Rs 50 lacs lump sum and then Rs 2,000 per month. Hope you get my point.
I would suggest take an asset allocation approach. Invest part in PPF and SSY and part in equity mutual funds.
Hi Deepesh, I follow up question.
Is it a good idea (or is it possible) to close minor child’s PPF account (after 15 years) while he/she is still a minor (before turning 18) and open a new account once they become major? What are the rules around it and what should be done to gain maximum advantage? Please elaborate.
Thanks. Rahul Kulkarni
Hi Rahul,
Don’t close the account. Continue the same account.
If you close the account, the new account will again have to run initial maturity period of 15 years. So, essentially, you lose all the flexibility.
Hi Deepesh, interesting article. in a family of 4, where both are earning, Husband contributes 1.5 lakhs to his son’s account, where he is guardian and also same amount to his wife’s account, then Wife contributes 1.5 lakhs to each of Husband’s account and another child where she is guardian, will this work?
Hi Narendra,
I get your point. Technically, this looks correct but not in spirit.
I have covered another permutation in one of my earlier posts.
https://www.personalfinanceplan.in/how-you-and-your-spouse-can-invest-more-than-rs-1-5-lacs-in-ppf-accounts/
1. The obvious question on demise of parents/guardian in case of minor ppf is not explained. Please explain and update.
2. Also what are the procedures to operate a PPF account on maturity of the minor. For e.g The savings account is in name of Guardian/Parents Name but PPF account is in name of Minor name. How redemption will work say will it get transferred to savings account or is it separate redemption forms?
Sunil,
Thanks for the feedback.
It is difficult to cover all the possible scenarios in a short post.
In the event of death of guardian, the account is not closed. The account remains operative.The surviving natural guardian or as appointed by court can continue the account in the name of minor.
Would suggest you go through PPF Act. It is a breeze compared to other Acts.
Search for the keyword “Guardian”. You will get answers to all your questions.
The Act answers questions about procedure and scenarios in great detail.
Thanks for the comment.
There is an use case:
A joint account of an husband and wife in SBI S/B, can link to two PPF accounts of one in their kid’s name and one in spouse name. I believe this is fine. Please clarify
( Only PPF joint account is not accepted )
PPF Act does not put any such restriction. There is more of an operational issue at the bank level.
Suggest you check with the bank only.
PPF Account is a separate account and technically, there is no need to have savings account either. However, banks insist on opening savings account.
If if you see PPF withdrawal form, you can take out the money through Demand draft too.
https://retail.onlinesbi.com/sbi/downloads/PPF/FORM-C_(PPF%20WITHDRAWAL).pdf
Thanks for the prompt reply.
Will check with the bank.
Having online account is lot easier to manage ppfs, right
Yes, it is better to have an account where you have online access too.
Appreciate Deepesh, for the informative article and related posts clarifying the doubts.
In the case of PPF account in the name of Husband and Wife. Can the husband issue a cheque for Rs.1.5 Lac to the wife account or the husband has to gift the 1.5 Lacs to wife by way of transferring to her SB account and later the wife has to deposit the amount in PPF from her savings account. This is considering the taxation angle.
Kindly enlighten me on this subject.
Hi Ilango,
Glad you liked the post.
Slightly subjective.
Better, you credit the amount directly to her PPF account. That is the safest approach.
If your wife does not have any source of income, you can transfer to her SB account and she can then credit her PPF account.
Remember both of you cannot claim tax benefit for the same investment.
Dear Raghaw, I always enjoy reading your posts. I have opened three PPF accouns: one in my name, one in my wife’s name and one in my major son’s name. If I deposit 1.5 lakh in each account can each of us claim deduction of 1.5 lakh each (total 4.5 lakhs) under 80C? Thanks.
Thanks Mr. Murthy.
Yes. So, essentially you gift Rs 1.5 lacs to your wife and son (major). Gift from spouse and parents are exempt from tax.
And then they deposit in their respective PPF account. So, each of you can get tax benefit.
They must disclose the gifts in their income tax return.
Interest from your wife’s PPF account will be clubbed with your income, if she is a home-maker. However, since interest on PPF account is exempt, there is no impact on your tax liability.
In your case, I assume all three of you have sources of income. So, even clubbing provisions may not apply.
Hi Deepesh,
Thanks for your prompt reply.
As rightly pointed out, my wife does not have any source of income.
I will follow your advise.
Thank you once again.
You are welcome.
Will appreciate if you could share the post with friends and family.
My simple and sober question is
1) I have a own ppf account since last 5 years.
2) so I want to open my child( he’s age is 2 years) ka PPF account with my 2nd name and my child’s 1st name. Same sbi bank it is possible two ppf account in one savings bbank
Joint PPF accounts are not allowed. You will be the guardian in your son’s PPF account.
Please check this with SBI. PPF Act does not put any such limitation.
Hi Deepesh,
Thank you for the informative article. Could you please let me know if NRIs can open PPF accounts for their children/parents who are also living abroad with them?
Thanks and regards,
Nitin
Hi Nitin,
You are welcome.
NRIs are not permitted to open PPF accounts. Hence, that is not an option for you.
Moreover, please understand PPF interest is tax-free in India but you may have to pay tax on PPF interest income abroad.
Hi,
I am working professional. Due to many investments I have no need to invest in PPF to reach 80C limit of 1.5 lac. Therefore I deposit only Rs. 500/- to keep the account active.
My mother has received some income by way of share trading and would have to pay tax if not invested.
Can she deposit money in my PPF account and get the benefit of 80C?
Yes, she can.
Hi
Me and my father are both working professionals. I do not take benefit of investment in my ppf account so i make only minimum deposit in it. My father does not have any ppf aacount in his name neither he wants to open one due to 15 years locking period. My ques is can my father deposit in my ppf account and take the benefit in 80 c?
Yes, he can do that.
Hi Deepesh,
I have one PPF account on my name and one PPF account for my child with me as a guardian. I have invested 1 lakh in these two account each year. Now, seeing the post I realized the mistake. Since my child’s account is 10 years old, I cannot close the account and remove the money.
What can be done now?
Thanks, Sanju
Hi Sanju,
I don’t think much can be done now.
You let amount lie in those accounts and hope you are never caught.
In case it comes to bank’s attention and they choose to act, you wouldn’t get interest on the excess deposit.
And yes, please avoid such mistake in the future.
I’m an NRI holding a new account i n India,can I invest in ppf on my wife’s name who i s a house wife here in India.
New account?
If your wife is a resident Indian, she can open a PPF account.
In addition to parent’s PPF a/c in which 1.5 lacs is deposited annually, can a minor child’s PPF a/c be opened and HUF make the contribution for the minor? Though no deductions will be allowed, will the interest on the additional 1.5 lacs for the minor be permissible?
HUF is not permitted to open PPF account. I would extend it to mean they can’t contribute either.
You will have to contribute in minor child’s account.
I have opened ppf account in the name of my son.I want to know if the account can be transferred to my son’s name when he attains the age of 18 that is when he is not a minor.
Thanks
Yes
I have a PPF account maturing this year. My status now is NRI. I understand that an NRI cannot extend the PPF account. My doubt is, if I do not withdraw the matured amount, will I get interest till the date I withdraw the amount (when I come to India)
This is a bit of a grey area. In my opinion (and I am 99% sure), you will earn interest till such time you withdraw the entire amount.
I have a ppf account in name of my minor daughter. Can l close this account before her marriage(after completion of 15 years).And she can open new ppf account after her marriage.
I have a ppf account in name of my minor daughter. Can l close this account before her marriage(after completion of 15 years).And she can open new ppf account after her marriage.
Once your daughter turns major, she will get control of the account. She can close PPF account if she wants.
Yes, after closing the first account, she can open a new account.
Hi Deepesh, really nice and informative article.
I am planning to open PPF accounts for myself and my kid. My wife is a home maker. If I open kid’s account with my wife as guardian, can I gift 1.5L to my wife and then she transfers the same to the kid’s PPF? This way I can get total 3L invested in PPF and the interests and maturity will be tax free. I am not expecting any income tax benefit on the invested amount as I have other options to fill in 80C completely.
Is the above investment completely legal?
Thanks Abhishek. Glad you liked the article.
Yes, you can do that. Completely legal.
The only restriction is that the cumulative investment in your PPF account and in those PPF accounts where you are guardian should not exceed Rs 1.5 lacs per financial year.
If your spouse is the guardian, you can invest Rs 1.5 lacs in your PPF account and Rs 1.5 lacs in your kid’s PPF account.
Please do share the post with friends and family.
Am opening a PPF account for my 21 years old daughter. So I can deposit any amount between our two accounts not exceeding 1.5 lacs right????
You can deposit more than Rs 1.5 lacs in your PPF account and in those accounts where you are the guardian.
For your 21 year old daughter, there is no concept of guardian. She is a major.
Hence, no such restriction applies.
You can put upto Rs 1.5 lacs in your account and Rs 1.5 lacs in your major daughter’s account.
Maximum of Rs 3 lacs per financial year.
Hi i made a ppf in my daughter account for Rs 1.5 lac. can i take that amount while filing my income tax return under 80 c
Hi Devaraj,
Yes, you can claim the contribution you made in your daughter’s PPF account under Section 80C.
Thank you. but my daughter also filing income tax return so whati should do weather i have to shown in my account or in my daughter account
In my opinion, the one who made the contribution should take the benefit.
If you did, your daughter can transfer the money to your savings account and you can share.
In any case, do not take up double benefit.
Both of you should not take for Rs 1.5 lacs each i.e Rs 3 lacs in total.
Alternatively, you can split the amount and file your return.
HI,
Mutual fund redemption amount were we have to show in computation sheet
Hi Devaraj,
I am not the right person for this. Please talk to a chartered accountant.
Namasthe Deepesh ji,
I have opened a PPF account in last september. How do they consider my ppf account financial year(apr15-mar16) wise or (sep15 to aug16). Please clarify my doubt..
Dear Bhavani,
Financial year is April 1 -March 31.
Thankyou so much for prompt reply. I have opened ppf in Sep2015 so when is the maturity year . Is it mar2030 or mar2031.
March 2031
Can i avail tax benefit on my grand children ppf account if i deposit fund in thier ppf account
Dear Sir,
Technically, only parents can be guardians and only guardian can contribute. Only when parents are not alive or incapable of acting, can somebody else (including grandparent) be the guardian.
Under Section 80C, you are permitted tax benefit for investment for investment in your, your spouse or your children’s PPF account.
So, tax benefit for investing in grandchildren’s account.
Hi Deepesh,
If I open a ppf account for my 5 year old kid, it will mature once he is 20 years old. I plan to invest 1.5 lacs each in my ppf and my son’s ppf account. I will avail benefit from my account only.
I understand that their is no interest on amount excess of 1.5 lacs but my son will be a major when his account matures so will he get the interest benefit ?
Hi Akash,
I am not sure if I got your question.
As I understand, you want to contribute more than Rs 1.5 lacs to PPF accounts. Say,Rs 1.5 lacs in your account and Rs 1.5 lacs in your son’s account.I assume you are the guardian in your son’s account.
That is not permitted. Any amount that you deposit in excess of Rs 1.5 lacs will technically never earn any interest. Not now when your son is minor and not when your son turns major.
So, don’t do that.
You can open account in name of your spouse. You can then invest Rs 1.5 lacs in her account and Rs 1.5 lacs in your son’s account. No problems with that.
Thanks for the quick response Deepesh !
My wife and myself already have ppf accounts and I put 1.5 lacs in each of them (she is homemaker). My query is that if I open ppf accounts for my twin sons and my wife and myself become guardian for one son each then will it benefit and once my sons gets adult, will they get the benefit ?
Hi Akash,
I am a bit confused. What benefit are you talking about?
Btw, you can not invest more than Rs 1.5 lacs combined in your PPF and in those PPF accounts where you are the guardian. Same applies ot your spouse.
You are guardian only for a minor child. Once the child becomes major, you are no longer guardian.
Hi Deepesh
I Appreciate your contributions. You are really doing great.
My daughter is 13yrs old. I want to open PPF account in her name as minor but I can’t exceed the total limit of 1.5lacs at present(incl investment in my existing account). However after turning major, can she operate the same account with additional investment of 1.5lacs made by me (total investment 3.0lacs by me)? Please advise.
Thank Piyush.
You are right.
The cap of Rs 1.5 lacs is on amounts that you deposit in your PPF account and those accounts where you are the guardian.
Once your daughter becomes major, you are no longer the guardian.
So, upto Rs 3 lacs can go into two PPF accounts once your daughter becomes major.
Thanks Deepesh
Can I deposit more then 1.5 lac as a ppf account holder and a s a guarantor of a minor account if I am an nri and linked to nre and nro account “?
NRIs are not permitted to invest in PPF account. Only if the account was opened before becoming NRI, can a PPF account for an NRI be continued till maturity.
Assuming the accounts were opened before becoming NRI, you cannot deposit more than a total of Rs 1.5 lacs in your PPF account and those accounts where you are the guardian. I assume you meant guardian when you wrote guarantor.
i am a single parent with two kids whose only guardian is me. can i open 2 PPF accounts?
and of course i want to deposit more than 1.5 lacs. is that possible?
You can open three accounts.
1. One for yourself
2. 1 each for kids. You will be guardian in those two accounts.
As per PPF Act, you cannot deposit more than Rs 1.5 lacs in a financial year in PPF accounts, which are either owned by you or where you act as the guardian.
Hence, you won’t be able to invest more than RS 1.5 lacs.
I am NRI,My children staying india,can i open ppf account for them and declare i am the guardian..
Tricky. I am not very sure. I think you cannot.
Suggest you check this with the bank.
hi I am bit confuse between child plan and PPF for my 7 month old please guide me for the same. Thanks in advanced 🙂
Purchase term cover for yourself. You may consider investing in PPF or equity funds for you kid.
Dear Deepesh,
I have unknowingly kept myself as the guardian for both my minor daughters daughters PPF accounts. After realizing that I am not allowed to invest more than 1.5 lacs cumulatively, when I approached ICICI bank to change guardian name to my wife for one of the accounts, they said that once PPF account is created, guardian name cannot be changed. Can you please help how this issue can be addressed
Dear Sanjiv,
This question has been asked before on this forum.
I couldn’t find a solution to the problem.
I had re-read the PPF act. There was provision for change in guardian in the event of demise of guardian.
However, there is no mention about how to change guardian, if the guardian is still alive.
Please understand that it does not mean guardian cannot be changed. It is just that I am not aware if there is a way to do it.
Btw, if you want to contribute more,there is a small workaround.
Open PPF account for your wife and invest Rs 1.5 lacs in that account.
Read the PPF
Sir, my wife is a teacher and a ppf account for last six years. I am a engineer and have ppf accont for last 19 years. Recently I have opened two more ppf account in the name of my daugherts(age 15 and 13 years) gaurduian as my wife. I have deposited 1.5 lacs in all four account. Will i not get interest in the two account where my wife is a gaurdian. What to do
Dear Rajeev,
Technically, your wife shouldn’t get interest on the excess amount.
Practically, you may just escape.
Don’t think you can do anything. The bank wouldn’t give you the money back.
Don’t commit this mistake in the future.
Dear sir
i have one existing PPF account in SBI. i am interested to open a ppf account on behalf of my child. in same sbi branch while i contacted for opening of new ppf account after downloaded form generated from personal banking for my son the SBI officials told we can not open ppf account for your child.
kindly guide me.
This is quite bizarre. You can open PPF account for your kid.
Did SBI specify any reason?
Hello Deepakji, I liked your articles. I have one question. I already have a PPF account which is 7 years old and now i turned to NRI. I would like to open an account for my two kids and are indian residents can i open it and get interest on them or my wife has to open one as a guardian for one kid and i have to open one for another kid. Please suggest. I want to open account for both kids.
Dear Kushal,
This aspect is bit of a grey area for me.
I am not sure if an NRI can be guardian in the PPF account of a minor. If you read the Act, it can be argued both ways.
Suggest you check with the bank.
If your wife is a resident, she can be the guardian in accounts of both the kids.
sir how tax plannanig possible with ppf a/c on the name of children ? if someone deposit an amount of rs.150000 in cash in the ppf a/c name of the children becuse only limt of rs.150000 deduction is avilable in the sec 80c the ho can not take deduction under 80c on his own behalf .
All the cases have been discussed in the post itself. Suggest you go through following post too.
http://www.personalfinanceplan.in/product-review/all-you-need-to-know-about-ppf-account/
Yes, you can deposit only up to Rs 1.5 lacs (in total) in your PPF account or those PPF accounts where you act as guardian.
Dear Deepesh,
Me and my spouse are pensioners. We have three grand children and my son as well as my daughter in law are also earning through salary.My son and my daughter in law have their separate PPF accounts and we, me and my spouse, have already closed our PPF accounts. We deposit in other means for availing rebate under section 80. My son has opened the saving accounts of each child, separately, under his gaurdianship. Now he is applying for PAN numbers of each child and the PAN numbers would be received shortly.
Now my question is:
1. Can we deposit a sum of Rs. 1.5 lacs in each PPF account of the three children? Or me, my spouse may deposit Rs. 1.5 lacs in one child PPF account and may not avail the tax exemption too and for the third child PPF, it would be left to be dealt with his gaurdian.
2. Will the income from PPF accounts on maturity would be clubbed with their gaurdian income or it would be treated as the income of the children. Normally there is no tax on its maturity of PPF account.
3. Since the children have separate bank account and separate PAN number, can it be considered as their collection as gifts etc.?
Please reply to me on my mail address as mpmittal2007@gmail.com. I will be highly thankful to you.
Dear Sir,
1. Till such time parents are alive, one of them will have to be guardian. Hence, they can only contribute/deposit. There is an additional rule. Total contribution to your PPF account and those PPF accounts where you act as guardian cannot exceed Rs 1.5 lacs per annum.
2. PPF income will be clubbed with guardian so long as they are minor. PPF interest is exempt from tax. So, does not really matter.
3. You can gift them money. However, aforementioned restriction of Rs 1.5 lacs will still apply.
Hope this clarifies your query.
U/S. 64(1A) In computing Total Income of any individual is explained not gross total income. U/S. 80C is deductible from Gross Total income.
Dear Deepesh,
I have one PPF Account in my name where I have invested 1.5 Lac. My wife is a Housewife. Can I open the PPF account in her name & invest Additional amount in her account. I do not want to Claim Tax Rebate. Looking for your reply.
Thanks a lot.
Hi Abhishek,
Yes, you can invest Rs 1.5 lacs in your account and Rs 1.5 lacs in your wife’s account.
Hi Deepesh,
My Husband is PPF account holder and he uses this PPF account for Tax exemption. I am working woman shall i use the same PPF account of my husband for my Tax exemption.
Yes, you can do that. But why don’t you open a PPF account for yourself?
Firstly I must thank you for educating us as finance is too tricky subject for non financial person.
I understand from various posts that I ( guardian) for 2 minor kids with PPF accounts can not invest more than 1.5 Lakh total for 3 of us in a financial year.If I want to invest more I can tell my wife to open a separate PPF account I can transfer 1.5 lac from my saving account as a gift to her PPF account and our family can enjoy tax free returns on 3 lakh annual investment .Please confirm.
While i”m allocating 1.5 lac totalin my and my kids account .Can I also invest additional 1.5 lakh in Sukanya Samridhi Yojana for my daughter.
Tons of thanks for your various article
Thanks Avanish!!!
1. Yes
2. Yes
Please do share the articles you like with your friends.
Many thanks Deepesh.I will definitely share and looking forward to interact with you further on financial plan meanwhile please also help in few questions related to above
1 point is completely clear.
2 point- Does it mean that I can invest 1.5 lakh total for kids in PF,1.5 LAKH for my wife PF and 1.5 lakh additional for daughter’s sukanya samridi and that amounts to total 4.5 lakh in an year tax free return.Many Thanks
Hope it is a wise investment .
Thanks again
You are welcome, Avanish.
2. Yes. I assume you are the guardian in your kids’ account. You can put Rs 4.5 lacs in these accounts.
Difficult to say if it is a wise investment. Don’t limit yourself to just debt investments.
My Father (retired) don’t have PPF account. He as a Gurdian to my son can deposit an addiitional amount of 1.5 lac in my son’s PPF account?
No, you or your spouse have to be guardian in your son’s PPF account.
Hi Deepesh,
My father in law is working and also holding a PPF account. He wants to gift money to my kid in the nature of PPF and intents to open a PPF account in my kids name and deposit money. Can he do so ?
Also consider the fact that me and my husband also hold PPF account ?
Will it attract any gift tax?
How will it be taxable and in whose hands?
Dear Amritha,
Your father-in-law can’t be guardian in your kid’s PPF account (so long as you and your husband are around).
You (or your husband) can open the PPF account for your kid.
Let your father-in-law gift money to you or your kid.
There will no tax on the gifted amount.
The Benami Transactions Amendment Act passed recently has made things interesting.
PPF interest is non-taxable.Don’t worry much about it. Won’t increase tax liability.
You can report in your or your husband’s name, depending upon who earns more.
About reporting, you should talk to your CA.
Hi Deepesh,
First of all I would like to thank you for educating us on how the ceiling limit of 1.5 lacs at present works in terms of minor and self. I’ve been searching for answers on eligibility of opening a PPF account and found conflicting answers. Hence need your suggestion on this part. Here is the situation. My both the kid’s (11 yrs old daughter and 8 yrs old son) are minor and they are US Citizen by birth. Both myself and my wife are the citizen of India. We moved back to India permanently in 2011 and since then we’ve been living in India along with my family and kids. Both of my kids have PIO (Persons of Indian Origin) cards. Can I open PPF account for my kids being myself or my wife as guardian?
I checked with SBI but they were not sure if I can open a PPF account for my kids.
Regards,
Debasish
Hi Debasish,
Thanks for the kind words.
To be honest, this one is a bit tricky. I have read conflicting arguments on this topic.
PPF Act prohibits NRI from opening accounts. However, in your case, your kids will be resident as per FEMA. So, should be allowed to invest.
However, I feel if NRIs are not allowed to invest (despite being Indian citizens), why should OCIs and PIOs be allowed to invest in PPF? After all, they are not even proper citizens of India.
Frankly, I don’t know.
If there is no clarity on this matter, it is better to NOT invest.
Thanks you Deepesh !
Hi sir ,
It’s a great job your doing by sharing required information with the public. My question is can a grandparent open a ppf account of her granddaughter aged 11 years and claim tax benefit for the same as a gaurdian . Number 2 what happens if the gaurdian is no more say after five years of paying what shall be the scenario then. I am having a ppf for myself. Thanks in advance
Thanks!!!
As long as parents are alive and have the capacity to act, one of them should be the guardian.
Sir
I am a salaried employee and a tax payer
Please let me know if I can get tax benefits by investing in ppf in the name of my spouse and minor baby
Dear Feroj,
You will get benefit by investing in PPF account of your spouse and kids.
I have PPF account for my daughter in SBI bank,while initial opening of the PPF account I used to deposit some amount every year and since 2008 onwards I haven’t deposited any amount so what would happen to the account.
Does the account becomes dormant/ or would I need to pay some penalty for not depositing for all these years,please eloborate.
Thanks
Ramesh
Dear Ramesh,
You just to pay arrear contribution (Rs 500 per month) and a minor penalty (Rs 50 per year of non-contribution).
The arrear contribution goes to your PPF account only.
In addition to the last comment I forgot to mention the locking period of the PPF account,it is 15 years.I would appreciate if you could reply me back on this ASAP.
Thanks and Best Regards,
Ramesh
Dear Ramesh,
The initial maturity for all PPF account is 15 years.
Dear Deepesh,
It is in perspective to your earlier comment, you’d said that the penalty and late fees for the PPF account would go to my account ppf only,is it so? because I don’t have any saving account in SBI so to iterate that money would go my ppf isn’t?
I was in assumption the Penalty and late fee money would go to Bank,if you say NO then it would add up to the money in my account isn”t?
They asked me to pay the arrears+late fees from 2008-2016,why so?meaning why they haven’t included this 2017 for arrears and late fees? As I told you earlier my account was opened in 2006(sep)and they calculated the withdrawal amount as per instruction from the ppf booklet for 7 years.
BTW thanks for very useful info,i really do appreciate your service here and moreover one day ago I paid the arrears and late fees.;-)
Regards,
Ramesh
Dear Ramesh,
You are welcome.
Arrears will go to your PPF account. Penalty will not go to your PPF account.
Dear Deepesh,
Thanks again for your reply but again you didn’t reply to this part of my earlier question-“They asked me to pay the arrears+late fees from 2008-2016 only,why so?meaning why they haven’t included this 2017(2016-2017) for arrears and late fees? As I told you earlier my account was opened in 2006(sep)and they calculated the withdrawal amount as per instruction from the ppf booklet for 7 years and I had also withdrew some amount after paying the dues,my question is,why they haven’t collected any arrears for 2016 to 2017?
Regards,
Ramesh
You are welcome, Ramesh.
Request you to share the post with your friends and family too.
When did you PPF account mature?
PPF is linked to G-Sec. Do you still recommend PPF vs Debt Funds. PPF is 8% now, where in debt funds are marginally give better return than PPF.
Hi Sunil,
You have to look at risk-reward profile.
Low volatility and high credit quality debt funds will find it very difficult to outperform PPF post-tax. Even pre-tax won’t be as easy.
You can always take greater credit and interest rate risk to generate better returns. However, don’t ignore the risk in that case.
But yes, PPF is mainly for debt allocation for long term goals.
Debt funds are better suited for short term goals (unless PPF already matured or about to mature)
Deepesh
I have a query, can I open a ppf account in my childs name &one account in my name…if yes my second question is bank people will ask the same documents right…is it OK to produce ….
Plz get back to me
Hi Vijayshree,
Yes, you can do that.
When you fill the PPF form, everything will become clear.
You have to specify details from all the PPF accounts where you are the guardian.
Banks will go by the process. If documents are required, they will ask for it.
Dear Deepesh i appreciate the patience you have shown in reply to the answers of people .
I read all your reply bt still have a question,
I and my son have separate PPF accounts. I have already deposited 1.5 lakh in my PPF account. Now my father has gifted my son 1 lakh cheque in his PPF account on his birthday.
A) So as a guardian whether the total deposition limit of 1.5 laks (for both the accounts)will apply , as I am not depositing this 1 lakh to my son`s PPF account bt my father is gifting him.
B) as understood from previous reply the interest on this gifted amount in my son`s PPF account will not be added to my income.
Dear Vishal,
Thanks. Please share the post with your friends.
Are you the guardian in your son’s account? If yes,then the limit is for the accounts combined.
So, no money can go to your son’s PPF account. Technically, only parents are supposed to contribute.
There is a minor tweak possible. I am not sure if it is correct or not.
Please go through the following post.
https://www.personalfinanceplan.in/opinion/how-you-and-your-spouse-can-invest-more-than-rs-1-5-lacs-in-ppf-accounts/
Thanx Deepesh, it was really informative.
You are welcome, Vishal.
My cousin who opened a PPF account in post office in name of his minor son while in India subsquently became an NRI. His son is now major, but does not have a PAN Card or an Indian Bank account. His son is also a British citizen. The PPF has now matured. Can the maturity amount be provided to his father?
Hi Rajesh,
The amount should go to holder’s account.
As I understand, it can’t be transferred to his father’s account.
Quite useful!!! Thanks for sharing!!!
Hi
Iam 45 yrs old working woman. My PPF account has recently matured and I have option of either extending it or withdrawal. From tax savings perspective my contribution to PPF is not useful for me. Currently in life stage I don’t have a requirement of this big amount. Kids are still in school and no loans or liabilities to pay off currently. I am now confused should I withdraw this amount and put this investment elsewhere to get better returns than PPF or should I extend this account? I have other investments in Mutual funds debt and equity both.
Dear Madam,
It is difficult to comment without knowing much about your finances and goals.
Personally, I like PPF a lot. I wouldn’t recommend closing the PPF account.
Suggest you go through the following post.
https://www.personalfinanceplan.in/opinion/how-to-use-ppf-account-as-a-pension-tool/
Hello sir , I am really appreciating that you are doing a great job , thanks to you
I invested rs 1.50 lacs in my own ppf account in current financial year
by mistake I opened a new ppf account for my 12 years old son and contribute 80 thousand rupees
now after reading your posts I understand that it was a mistake
please tell me if I can terminate or cancell my son`s account by giving them declaration that I opened the account by mistake
or if I can change the guardian as my wife
or if there is any other way which I can save my amount to blocked for 15 years without interest
please help , its a tension for me
thanks
sanjeev
Hi Sanjeev,
I am not sure. Bank wouldn’t let you close.
You can try change of guardian to your spouse. But I don’t know how to do that.
Sir ,
I am having a ppf ac in my name (self individual) and my huf ac which is before 2005. In both ac i put 150000 from there resp ac’s and claim deduction in income tax. Interest is earned on both ppf ac is shown in income tax return . Is it right what i am doing or it is the same scenario like minor ac where we can put 150000 in all three ac but benifit of interest is given in only one ac . Please clarify. Does huf ac is different entity or its like minor ac scenario
Hi Aman,
HUF is a separate taxable entity. You can invest up to Rs 1.5 lacs per annum in that account.
This is over and above subscription in your account.
You won’t be able to continue HUF account once 15 years are over.
Hi Deepesh,
I do have a query. I have a PPF account which is 5 years old and with the birth of my baby boy this year I want to open a new PPF account on his name as well (as a guardian).
Is it possible to open a separate account for my child being a guardian and still have a separate account for myself?
Regards,
Rohit D
Hi Rohit,
You can have two accounts (one of you and one for your child with you as guardian).
Just make sure the total investments in the two accounts does not exceed Rs 1.5 lacs in a financial year.
If you want to invest more, it is better to have your wife as the guardian in your son’s account.
My daughter passed away on 30/8. She has two minor children. She has opened PPF a/C’s for both. My S in law has now become their gaurdian.He has a PPF a/c in his name. Daughter had deposited 30 k in each child’s name. How will the rules of 1.5 lakhs limit apply now? Can we say that from the date of change of gaurdian the limit will get reset?
Dear Sir,
I am sorry for your personal loss.
I am not very sure about this.
However, in my opinion, your son-in-law can contribute a combined total of Rs 1.5 lacs in his and two daughter’s account.
This is over and above your daughter’s contribution.
Dear Deepesh,
I am an NRI opened my PPF a/c in SBI before becoming NRI & continued till maturity of 15 years. At the time of maturity I donot know that NRIs cannot extend PPF a/c & got it extended for another 5 years. Also I opened PPF a/c for my minor daughter in same SBI & continued to contribute for both PPF accounts. Later I come to know one cannot invest more than 1.5L combining all PPF accounts. I read it in some website that, I can continue to invest for my PPF a/c through my wife’s savings account & for minor daughter’s PPF I can invest through my savings a/c which I am doing for the recent years. Now again my PPF a/c matured another block of 5 years. However after reading all the stuff I am confused now. Can you please guide me what I have to do in this situation. The thing is both the PPF accounts are in SBI & bank continue to accept the contributions for more than 1.5L. Request you to suggest whether I should close my PPF a/c & withdraw all money from my PPF a/c. Is it ok to contribute to my PPF a/c through my wife’s savings a/c?
Thanks in advance,
Rgds,
Rajanna
Dear Rajanna,
I don’t know what to say.
Just that do not invest aggressively in PPF now.
Even I have a post on this very topic (where say non-guardian spouse can contribute). However, the approach does not seem right in spirit.
Better to close PPF account when the extension period is over.
Dear Mr Deepesh,
Yes I will close my PPF a/c & it is right thing now.
Thank you very much.
Dear Mr.Deepesh,
Thank you very much & its better to close PPF.
Sir, very good write up. Me and my husband hold seperate PPF account on our names. We have 2 minor girls. If we open 2 new PPF account on their names,
1) can my husband deposit 1.5L each in their account apart from depositing 1.5L in his account.
2) will the extra 3 L gain interest?
3) will the extra 3L gain tax rebate?
Thanks.
Hi Preethi,
Thanks!!!
Who is the guardian in girls’ PPF accounts?
Even though technically you can invest more than Rs 3 lacs in PPF account, I would suggest you keep within the limit of Rs 3 lacs for your family. I have discussed this aspect in another post.
https://www.personalfinanceplan.in/opinion/how-you-and-your-spouse-can-invest-more-than-rs-1-5-lacs-in-ppf-accounts/
Hello Sir,
I’m a NRE working in the merchant Navy, can I be the guardians for my minor daughter for a PPf account.
Hi Akash,
These aspects are always tricky.
In my opinion, since your daughter is resident, the account can be opened.
However, to avoid confusion, suggest make your spouse (I assume she is a resident) the guardian in your daughter’s account. No confusion in that case.
Will I get a dual tax benefit if I open both PPF and SSY account of my daughter?
Yes, you will get the tax benefit for both but the benefit is capped at Rs Rs. 1.5 lacs.
Dear Dipesh,
Thank you so much for the very good article that clarifies a number of things. I was actully looking for such an article because recently ICICI bank refused to accept the PPF deposits for my two minor kids. Since the last three years I have been depositing 1.5 lakh in each of my minor kids account but this time the bank refused to accept citing the rule and I was surprised that they didn’t tell me before. In fact, it was a bank representative who encourged me to open two accounts. Anyways, now the bank people are not able to tell me what to do with the accounts and the money deposited. What will be your suggestion? I am willing to close both the accounts or just keep some small amounts but that might conflict with my PFF account with SBI where I have deposited 1.5 lakh each year in the last 2 years. Shall be grateful for your suggestion. Thank you.
Dear Nand,
Hmmm…that is a problem.
Are you the guardian in both the accounts?
As per the rule, the total deposit in your PPF account and those PPF accounts of minor children where you are the guardian shall not exceed Rs 1.5 lacs in a financial year.
Therefore, the bank is right this time around.
The excess amount, if somehow deposited, does not earn any interest.
Bank officials are either not aware or don’t really care.
Here is an excerpt from the Act.
If contributions in excess of Rs. 1,00,000 are made during a year by the
subscriber, the deposits in excess of Rs. 1,00,000 will be treated as irregular
subscriptions and will neither carry any interest nor this excess amount will be
eligible for rebate under Section 80-C of the Income Tax Act. This excess amount
will be refunded by the Accounts Office to the subscriber without any interest.
Substitue Rs 1 lac with Rs 1.5 lacs.
I am not sure how this refund is effected.
You can write an email to MD/CEO of the bank, explain the situation and seek resolution.
Premature closure is only permitted after 5 years (and that too in very specific cases).
Atleast in the future, do not make such a mistake.
If you are the guardian in both the accounts, make your spouse the guardian in atleast one of the accounts.
Dear Deepesh,
Thank you so much for your response. The informal feedback that I got from the bank yesterday that no one is actually aware what should be done in such cases. I was told that nothing can be done and the money will lie in the account for 15 years without any interest. This sounds very weird. Actually, it was a bank employee who encouraged me to open these two accounts – both under my guardianship. Both the accounts were open on the same day, and with same documents from my side – PAN number, ID proof, etc, Therefore, somewhere the bank is also responsible.
Thank you for the suggestion to write to the bank’s MD/CEO. I will certainly do that and hope for the best. Just in case, the bank refuses to do anything, is there any authority where I can write? Another question: Is it possible to make the grandmother of the kids to become a guardian?
Thank you once again for this conversation which is benefitting me immensely.
Dear Nand,
You are welcome.
I know this sounds weird. However, when the PPF Act itself is not very clear on the issue, the confusion is bound to crop up.
At the same time, the bank official is at fault in conveying the wrong information. Ignorance is not innocence.
Btw, this applies to you too. You would have signed the declaration at the time of opening PPF account for kids that the total investment will not breach 1.5 lacs rupees.
Let’s see how the bank CEO responds.
Parents have to guardians in PPF account. Only when the parents have passed away or do not have the mental capacity to maintain PPF account, can someone else be a guardian.
Dear Deepesh,
Thank you for further information. You are right, I realise that it is my mistake as well. I remember the bank representative when she asked me to just sign the documents and she herself filled in all the information. I should have checked everything carefully. This is a lesson for me. Anyway, I will write to them and will surely share the feedback.
Sure, please keep me posted.
Desr sri Deepesh,
I have been contributing to my major daughter’s PPF account and claiming exemption under 80c. This year when I went to deposit, the bank asked me to furnish the PAN number of the account holder.I gave the PAN number of my daughter.Can I claim deduction under 80c in my IT return or should she claim the exemption?
rkrao
Yes, you can take tax benefit.
Thanks a million for the prompt response.rkrao
Dear Deepesh,
Can I claim rebate under 80C if I make a deposit of 1.5lac in my grandson (a minor) and son’s ppf account.
Can my son also make a contribution to my grandson’s account during this time so that net deposit in my grandson’s account is more then 1.5lac?
Dear Sir,
This is a slightly confusing issue.
Btw, one thing is clear: that you can’t contribute to your grandson’s PPF account. Only parents can.
About contribution to the account of major children, there is a slight disconnect between PPF and income tax act.
Income Tax Act permits tax benefit for investment in children’s account (major or minor). However, as per PPF act, the account is managed by the holder once he/she turns major.
From what I understand, you can contribute to son’s account (major) and get tax benefits.
Hi Deepesh,
I don’t have PPF account however my wife has PPF account and we recently open PPF accounts for our two son. My wife is the Gaurdian for our both minor son. Can I contribute money from my bank account to all three of them? Altogether I’ll be contributing 4.5 lakh (1.5 lakh to each PPF account).
Please Note, I don’t want to take any 80C tax deduction for any of the contribution. I want to make sure whether as a father and husband, I’m allowed to contribute to these account from my income. I’m not the gaurdian for any of the minor account.
Thanks
Hi Alok,
Suggest you go through the following post.
https://www.personalfinanceplan.in/opinion/how-you-and-your-spouse-can-invest-more-than-rs-1-5-lacs-in-ppf-accounts/
I would suggest that you limit yourself to Rs 3 lacs per annum.
Dear Deepesh, Please update on my query above?
Best Regards,
Alok Kumar
Hi Deepesh,
I wrongly transferred access amount in my PPF account . Is it possible to reverse the transaction to follow the 1,.5 Lack limit ?
Thanks,
Somen Sarkar
Hi Soman,
You transferred excess amount in your account?
If the total breaches Rs 1.5 lacs in the year, you can ask the bank to return the excess.
Not easy. You will have to fight for it.
Hi thanks for the article!
If i invest 1.5 lakhs in my account and 1.5 lakhs in my son’s account where my spouse is the guardian, will in earn interest on both the accounts?
In continuation, my spouse will invest 1.5 lakhs in his own account, will he earn interest too.
In totality, the total outflow is 4.5 lakhs during a year in 3 accounts, will there be interest income on the entire amount?
Correct perhaps to the letter of the law, not in spirit.
I would stay away from such roundabout ways.
https://www.personalfinanceplan.in/opinion/how-you-and-your-spouse-can-invest-more-than-rs-1-5-lacs-in-ppf-accounts/
What is the difference if I deposit 1.5 lacs in my ppf ac on 1st April and if I spread the total amount of 1.5 lac over 12 months in that year? Which one is better and why?
The interest is calculated based on your balance on 5th of every month (even though the interest is credited only at the end of the year).
That’s why depositing the entire amount at one go on April 1st will fetch you slightly higher returns.
Dear Sir
The minor`s PPF account can be subscribed by the Guardian only (Father/Mother).
But how the bank can verify the subscriber of minor PPF account is Guardian or any other person in case of subscription by digital means?
Dear Sandeep,
PPF account is linked to guardian’s bank account.
In any case, the rules are meant to be followed. Whether the bank can find about the mistake is immaterial.
Can we change guardian in ppf account?
yes
The article on PPF account is quite interesting! It is the first time that I’m reading about how to invest more than 1.5L!
I have an PPF account (>8 years) opened when my investments was less than 80C limit (1.5 L). Now, the limit is exceeded and just for the sake of keeping the account active, I’m depositing some amount which is idle. But, after reading your article, I’m thinking to maximize the benefit. My wife is home maker and have 2 kids (both are minor) and I’m also the Kartha of an HUF and HUFs are not permitted to open the account, I’m thinking to open an account for 1 kid where my wife is guardian and other account for another kid where I’m the guardian and I think this way, I can deposit 3 lakhs in PPF accounts – Am I right? Also, as Kartha, can I open another PPF account for my wife?
Appreciate your guidance.
Hi Harish,
Keep things simple.
Open accounts for all the 4 members of the family.
You can be the guardian in the account of the elder kid. Contribution to Your account + elder kid’s account <=1.5 lacs
Your wife can be the guardian in the account of the younger kid. Contribution to Your spouse's account+ younger kid's account <=1.5 lacs
Even though HUF cannopt open a PPF account, it can still contribute to PPF account of the member and take tax benefit.
Thank you for the advice! 🙂
Thanks for the interesting article on PPF account .
I am an NRI and my question is that can I open PPF account for my daughter who is in india?
Will I be eligible for Tax exemption ?
Appreciate your guidance.
You are welcome, Manoj.
Complicated.
In my opinion, so long as your daughter is not an NRI, a PPF account can be opened for her. I am not completely sure though.
You can be the guardian and claim tax benefits too.
Very informative and interesting post, Deepesh! Thank you!!
My ppf account (with SBI) is getting matured on March 2019. I want to extend it with the contribution for the block of the next 5 years. I wish to open up a ppf account for my minor son where I’ll be the guardian.
Is it possible to port my ppf from SBI to ICICI (where I wish to open up my son’s ppf account) for ease of handling and continue the extension period?
I understand that total contribution will be upto 1.5L in both these accounts.
Hi Deepesh, could you please try and answer my ppf porting related query?
Thanks Vaibhav!!!
Yes, you can transfer your PPF account to a different bank.
Total contribution in the 2 accounts is capped as Rs 1.5 lacs per annum.
Hi,
I found this article very useful.
I have my own PPF account, also have Sukanya for my daughter which I opened last year. My daughter is of 2 years now. I regularly do deposits.
Do I still need the PPF for daughter ?
Hi Deepesh,
I found this article very useful. I am a single parent. I already contribute to my PPF acct for the highest allowed amount which I do not wan t to reduc, .but want to open another acct in my kid’s name.Who can be a guardian for the child? Only parents ?
Hi Geetha,
Until such time parents are alive and mentally capable, only they can be the guardian.