The widespread misconception that both parents can contribute ₹1.5 lakh each to their child's PPF account, totaling ₹3 lakh, is incorrect according to regulatory guidelines. As reported by Mint, the Public Provident Fund (PPF) Scheme 2019 clearly states that the maximum permitted contribution is ₹1.5 lakh per financial year, per individual. This limit includes deposits made to both one's own PPF account and PPF accounts of minor children, regardless of parental contributions.
According to CA (Dr.) Suresh Surana's explanation to Mint, a minor's PPF account can be operated by only one designated guardian, and the aggregate contribution across all PPF accounts held by such guardian is restricted to ₹1.5 lakh per financial year. The ₹1.5 lakh cap is linked to the guardian, including contributions made to both the guardian's own PPF account and the minor's account. This means that even if both parents contribute, the total deposit in a child's PPF account cannot exceed ₹1.5 lakh in a given financial year.
PPF offers significant long-term wealth creation potential for disciplined investors. As detailed by Mint, investing the maximum allowed ₹1.5 lakh annually at the current 7.10% interest rate can build a substantial corpus over time. After 15 years, the corpus would reach approximately ₹40.68 lakh, including the total investment of ₹22.5 lakh. Extending the account for another 5 years (20 years total) can grow the corpus to ₹66.58 lakh, while continuing for another 5-year extension (25 years total) can reach approximately ₹1.03 crore. The scheme follows annual compounding principles, allowing investors to earn returns not only on original investments but also on accumulated interest over time.
PPF enjoys one of the most favorable tax treatments among investment options in India, falling under the EEE (Exempt-Exempt-Exempt) category. Contributions made to PPF accounts are eligible for tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh in a financial year. Additionally, the interest earned on investments is completely tax-free, making it an attractive option for long-term savers looking to maximize post-tax returns. Maturity proceeds withdrawn from PPF accounts are also entirely exempt from tax, ensuring investors receive the full benefit of their accumulated corpus without any deductions.
As reported by Mint, before making investments for children, it is prudent to consult with a certified financial advisor to plan for education, health, and overall well-being. While PPF remains a popular long-term savings option, there are other tax-efficient investment options available, including the Sukanya Samriddhi Yojana for daughters, mutual funds, or fixed deposits. Understanding these PPF rules can help avoid excess deposits and ensure proper tax compliance while building a secure financial future for children. The scheme also offers additional benefits such as loan facilities against PPF contributions (up to 25% of available balance) and partial withdrawals after 5 years, allowing investors to access up to 50% of the balance.
