Financial Planning for kids

PPF account is a very good and safe option.

·         A resident individual can open a PPF account on behalf of a minor child in the capacity of a guardian. Either of the parents can open the PPF account on behalf of the minor.

·         KYC documents, a passport size photograph along with the proof of age of the minor child (birth certificate/school certificate) are required to be submitted along with the account opening form.

·         An individual's PPF account and PPF account under his guardianship together have an annual investment cap of Rs 1.5 lakh.

·         Individuals need to declare all their PPF accounts — held in their name or their minor children’s' name — when opening a PPF account for a minor.

·         The guardian can claim a maximum of Rs 1.5 lakh under section 80C. This limit will apply on the balances in both PPF accounts.

·         Both parents cannot open a PPF account for the same child. One account per person rule will apply.

There are other sure shot benefits:

1)      Money is locked for 15 years. Put in the money and forget. Totally safe.

2)      You can deposit Rs 1.5 lacs a year. This limit is governed by 80C exemption limit.

3)      Tax free interest and interest rate is equivalent to PF interest rate.