Key Points
It is a common knowledge that a PPF account comes with a lock-in period of 15 years from the end of the financial year in which the account was opened..
Therefore, if you open a PPF account for your kid at an early stage in his/her life, then by the time he starts working or becomes adult (i.e., turns 18 years of age), the account would have matured or be close to maturity...
The advantage that your kid will get - provided he/she decides to extend the PPF account - is that he/she will get to use a PPF account with a shorter lock-in period of 5 years as compared to the normal lock-in of 15 years that a normal investor would face on opening a new account...
On the other hand, if the account is extended with fresh deposits, then not only will it help him/her develop the habit of saving from the first job onwards, but he/she will also be eligible to claim the tax benefit under section 80C of the Income Tax Act on the fresh deposits...
On the other hand, if the account is extended with fresh contribution, then during the five-year block, the withdrawal amount cannot exceed 60 per cent of the balance available at the start of extension period...
