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PPF Account: The Delhi High Court has delivered a significant ruling regarding the use of funds deposited in a child's name in PPF or other savings schemes. Let us understand the circumstances under which parents can utilize this money.

Child PPF Account Rules: Parents often invest in Public Provident Fund (PPF) and other savings schemes in their children's names, keeping in mind their education, career, and future needs. Consequently, many wonder if they can use these funds for their own expenses or other requirements when the need arises. The Delhi High Court recently issued a key ruling on this matter. Let’s find out more...

What was the case about?

A case involving a father and his daughter recently came to light. The father had opened a PPF account in his minor daughter's name in 1999. However, when the account matured in 2017, he withdrew approximately ₹13 lakh from it. The father claimed that he had invested the money to cover expenses such as his daughter's education and marriage. Later, however, the daughter claimed in court that the funds held in her name had not been spent on her. After hearing the case, the court ordered the father to return the money belonging to the daughter, along with 8% annual interest.

What was the High Court's ruling?

The court stated that money deposited in a child's name is considered to belong entirely to the child. In this context, parents are not the owners of the funds but merely trustees. It is the responsibility of every parent to bear the expenses related to their child's education, upbringing, and maintenance. Therefore, parents cannot use their children's accumulated savings to fulfill these obligations. Furthermore, it is their responsibility to hand over the accumulated funds to the child upon the child attaining the age of majority.

Why was the father's argument rejected?

The father argued in court that he had already spent a significant amount on his daughter's upbringing and education. They also argued that the PPF amount should be factored in alongside these expenses.
The High Court rejected this argument, stating that parents cannot offset their expenses against the child's accumulated savings.

Who can open a PPF account in a child's name?

Parents or legal guardians can open a PPF account in the name of a minor child.
The account can be opened at an authorized bank or a post office.
The child gains the right to operate the account upon attaining the age of 18.

What are the rules for a PPF account?

The initial maturity period of a PPF account is 15 years.
You can extend it in blocks of 5 years if you wish.
It is not mandatory to close the account upon maturity.
Continuing the investment over a long period offers the benefit of compounding.
A substantial corpus can be built through this.