The Best Savings Option for Your Child’s Future

Public Provident Fund (PPF) can be a useful long-term savings option for parents planning for their children’s higher education and future financial needs. A PPF account can be opened in the name of a minor child by either the mother or father, with only one parent acting as the guardian. Accounts can be opened through post offices or authorised banks.

A minimum of ₹500 and a maximum of ₹1.5 lakh can be deposited in a PPF account during a financial year. The combined annual contribution to a parent’s own PPF account and the minor child’s account cannot exceed ₹1.5 lakh. The scheme has a 15 year tenure. Loan facilities are available from the third year to the sixth year, while partial withdrawals are permitted from the seventh year subject to applicable rules. The account can also be extended in five-year blocks after maturity.

The current PPF interest rate is 7.1% per annum. Interest is calculated based on the lowest balance maintained between the fifth day and the end of each month and is credited annually on March 31. PPF enjoys an EEE tax status under the income-tax framework. Eligible contributions can receive a Section 80C deduction, while the interest earned and maturity proceeds are tax-exempt, subject to applicable rules.