The most common child-investment mistake in India is depositing ₹1.5 lakh into your PPF and ₹1.5 lakh into your child's — the rules cap you at ₹1.5 lakh combined.
Short answer: a parent can open a PPF account for a minor child — but under the PPF Scheme rules the ₹1.5 lakh annual ceiling applies to the guardian's own account and all minor accounts they hold, added together. Deposit ₹1.5 lakh in each and the excess earns no interest and no deduction — it just sits sterile until refunded. The child's account is a way to extend the term, not the limit.
PPF rate 7.1% for Q2 FY 2026-27 · PPF Scheme 2019 rules · Indicative, as of August 2026
One PPF account per person, lifetime. A minor's account is opened and operated by a guardian — a parent, or a court-appointed guardian; grandparents cannot open one unless they are the legal guardian. And the ceiling: the maximum a guardian can deposit in a year is ₹1.5 lakh across their own account and every minor account they operate. Both parents can each be guardian to a different child's account — that is the legitimate way a family runs more than ₹3 lakh a year of PPF: father's own + child one under father, mother's own + child two under mother, each parent respecting their own ₹1.5 lakh combined cap.
The 15-year clock. A PPF opened for a 3-year-old matures when the child is 18 — arriving exactly at the education years as a tax-free lump sum, extendable in 5-year blocks for life. It is the cheapest way to gift a child an already-mature PPF: at 21 they hold a fully seasoned account with full withdrawal flexibility, while their peers are starting year one of a fresh lock-in.
PPF interest is exempt income — so the clubbing provisions that drag a minor's FD interest into the higher-earning parent's return have nothing to tax here. Among guaranteed instruments for a child, PPF and SSY share this immunity; a minor's FD does not. That single fact reorders the entire guaranteed-returns menu for children.
The child, now major, submits fresh KYC and takes over operation; the guardian's role ends. The account continues on its own 15-year clock (and extensions). Nothing is taxed, nothing matures early, nothing needs to be moved — one of the few age-18 transitions in Indian finance with no paperwork trap attached, unlike the mutual fund folio freeze.
7.1% against SSY's 8.2% — for a daughter under 10, SSY simply pays more with the same sovereign guarantee and the same exemption, so SSY fills first. And against a 15-year equity SIP, PPF's certainty costs real expected return. Its niche is precise: guaranteed, tax-free, clubbing-proof money for a son (no SSY available), or for a daughter once SSY is maxed — funded within the combined limit you actually have.
No. The ₹1.5 lakh annual ceiling applies to the guardian's own account and all minor accounts they operate, combined. Excess deposits earn no interest and no deduction, and are eventually refunded without growth.
Not unless they are the child's legal guardian. Only a parent or legal guardian can open and operate a minor's PPF — grandparents who want to help can gift money to the parent or child instead.
The clubbing provisions technically apply, but PPF interest is exempt income — so there is nothing to tax. This is a key advantage over holding an FD in the child's name, whose interest is clubbed and taxed.
The child completes KYC as a major and takes over the account. The 15-year term and extension rights continue unchanged — no maturity, no tax event, no freeze.
Related: PPF scheme page · PPF Calculator · SSY vs mutual funds · Gift tax rules
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Written and checked by the PaisaSamajh editorial desk · Last reviewed: 24 August 2026 · How we check this →