Child PPF Account: Saving ₹ 5,000 every month in the name of the child will create a huge fund of ₹ 16.27 lakh.

It is very important to make financial planning right from an early age for children to pursue higher education, start their career or fulfill their other big goals. Although there are many investment options available in the market, the central government-backed ‘Public Provident Fund’ (PPF) scheme available in the Indian Post Office and major banks still remains the first choice of parents for safe and guaranteed returns. Being risk-free, every penny deposited in it remains completely safe.

How much will you get in 15 years by investing ₹5,000 per month? Learn complete mathematics

Currently on government PPF accounts 7.1% annual interest rate Is offering. If you open a PPF account in the name of your minor child and invest ₹ 5,000 every month (ie ₹ 60,000 annually), you will have a huge corpus on completion of the maturity period of 15 years.

(Note: PPF interest rates are reviewed by the government every quarter, so partial changes are possible in the final returns after 15 years.)

Rules for opening PPF account in the name of child: Keep in mind the limit of ₹ 1.5 lakh

Parents or legal guardians can open a PPF account in the name of their minor child. But there is an important condition related to income tax rules.

The total annual amount deposited in the parent’s own PPF account and the child’s PPF account together Not more than ₹1.5 lakh in a financial year There should be. If you are already depositing ₹1.5 lakh annually in your own PPF account, you cannot claim tax exemption on it by depositing additional amount in the child’s account.

Power of compounding and option to increase account after 15 years

The real magic of PPF lies not only in the fixed interest rate, but in the ‘Power of Compounding’ (interest on interest). The amount of interest may seem small in the initial years, but after the 10th year the fund grows rapidly.

If you do not need money immediately even after 15 years of maturity, you can open this account. 5-5 year block Can extend further. By doing this, by the time your child goes for college education at the age of 18-20, he can have a huge corpus of ₹25 to ₹30 lakh ready.

Bumper benefit of triple tax exemption (EEE Category)

PPF is included in the selected savings schemes of the country which EEE (Exempt-Exempt-Exempt) Has the status of:

• Tax exemption (Section 80C): Tax exemption is available on the amount deposited every year under Section 80C of the Income Tax Act.

• Zero tax on interest: The interest added to the account every year is completely tax-free.

• No tax on maturity: There is no tax of any kind on the entire maturity amount withdrawn after 15 years.

Is PPF the right investment for your child?

If you are looking for an investment option for a shorter period like 3 to 5 years, PPF is not suitable as it has a mandatory lock-in period of 15 years (although partial withdrawals are allowed with certain conditions). But if your goal is to provide financial security to your child’s higher education, marriage or their future, then nothing can be better than this zero-risk government option.