A reader asks, “I have a question regarding this article, wrt to the kid’s education corpus – After ten years of MF investing, Suhas is on track to achieve his financial goals. The user mentions opening a second ppf account. My question is, Is it possible for me to invest in my kid’s ppf account, as he is a minor when I am investing 1.5L in my PPF account?”
“Please note: I don’t need section 80C benefits while investing in my child’s account.
I have been trying to search this for some time, but there is no clear information on the internet, and even banks give different explanations/logic. I will mostly never use the funds from his account before he turns 18 and would be solely used for his higher education.”
The answer to, “Can I invest in my kid’s minor PPF account when I invest Rs 1.5 Lakhs in my PPF?” is a clear NO!
The rule on this is clear on the National Small Savings Institutes PPF rule page.
4. Limits of subscription.-(1) A deposit which shall not be less than five hundred rupees and not more than one lakh fifty thousand rupees in multiple of fifty rupees may be made in an account in a year.
(2) Maximum limit of one lakh fifty thousand rupees as specified in sub-paragraph (1) by an individual shall be inclusive of the deposits made in his own account and in the account opened on behalf of the minor.
The previous edition of the rules also states,
A Public Provident Fund account on behalf on a minor can be opened by either father or mother. Both the parents cannot open a separate account for the same minor. An individual may open one PPF account on behalf of each minor of whom he is the guardian.
We assume this is still valid.
Therefore, if I have a PPF account and open another PPF account in the name of my (minor) son, then the total investment I can make in both accounts each financial year is only Rs. 1.5 lakh. The rule will likely remain the same even if this limit is increased.
We urge readers not to maximise PPF investments unless they invest a significant sum in equity for long term goals. See: Do you really need a PPF account?
Also, see:
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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