How PPF Account On Behalf Of A Minor Is Taxed?

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 minors 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 familys 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: 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 minors PPF account.Advertisement 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 guardians 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. While opening a PPF account on behalf of a minor, keep the following facts in consideration.A minors 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 minors PPF account comes from the parents or guardians income, it will be counted in Section 80C of the Income Tax Act and qualify for tax deductions.A minors PPF account can be closed by a parent or guardian prematurely for the account holders higher education or treatment of life-threatening disease.An individual can make partial withdrawals from a minors PPF account starting in the seventh year when the account was opened.Except under exceptional circumstances, such as the account holders medical attention, a parent or guardian can close a minors 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 minors or persons 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 minors 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 childs PPF account.