If you want to save for your children’s future then you can invest in PPF account. You can get good returns by investing in it. Along with this, it can also be extended for 15 years i.e. 5-5 years. Because PPF account rules allow you to open an account for yourself and your minor child. Some reasons have also come forward as to why you i.e. the parent should open a PPF account for your child.
PPF account comes with a lock-in period of 15 years from the end of the financial year in which the account is opened. So if you open a PPF account for your child early in his life, by the time he starts working or becomes a senior (i.e., turns 18), his account will mature, however, Note that you can deposit the total amount in both the accounts (i.e., yours and your child’s) simultaneously.
According to the existing laws, it should not exceed Rs 1.5 lakh in a financial year. This is the maximum amount that you can put into PPF account in a financial year and avail Section 80C tax exemption. This Section 80C tax benefit is available only if you opt for the old tax regime while filing income tax return.
Your child will benefit from this
Once your child turns 18, he/she can decide to continue with the PPF account. He will be able to access the PPF account with a shorter lock-in period of 5 years as compared to the normal lock-in. It will take 15 years for a normal investor to open a new account. This is beneficial as currently the PPF account enjoys EEE status, ie contributions are tax free, interest is tax free, and withdrawals are also tax free. PPF is considered a good investment vehicle, but the long lock-in period of 15 years creates problems in it. This deficiency for your child will be overcome/reduced to a great extent.
partial withdrawal facility
As per the PPF rules, you get the facility to withdraw money from your PPF account from the 7th year onwards subject to certain terms and conditions. Withdrawal rules are different for Extended PPF account. In the extension years of the PPF account, the account holder has the option of withdrawal once in a financial year. However, the maximum amount you can withdraw depends on whether you have enhanced the account with or without contribution.
If the PPF account is extended without any contribution, one can withdraw any amount to the extent of the balance available in the account. On the other hand, if the account is extended with fresh contributions, the amount of withdrawal during a block of five years cannot exceed 60 per cent of the balance available at the beginning of the extension period.
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