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PPF Panic: Trouble withdrawing my minor daughter's college fund?

Ramalingam

Ramalingam Kalirajan  |9383 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 02, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - May 01, 2025Hindi
Money

Dear Sir.. I have been putting money in my minor daughter's PPF account since 2009. The idea was to meet expenditure for her college education, now the total is about 40 lkhs.I have never claimed any tax benefits on my daughter's PPf account though I am the official guardian of my daughter ,she is now 17.4 yrs old. I have a PPF account in my name. Now for her college admission I need the money for which I have been saving but I am being told the moment I fill Form C & the money gets credited to SB account I can be in a major trouble for having 2 PPF accounts. I am being advised to keep it as it is & pay her 1st year fees from other savings. Next year when she turns 18 /major make a PAN card for her, open a SB account in her name & make the PPF withdrawl to that account. Request your advise if the fear of trouble if I withdraw as minor's guardian is genuine & if she does it next year there will be no issue.

Ans: You have done a wonderful job planning for your daughter’s education. Starting a PPF account for her in 2009 and building Rs. 40 lakhs shows excellent foresight and discipline. It also shows your commitment as a responsible parent.

Now, as her college admission is near, your concern about the withdrawal is natural. Many parents face similar confusion at this stage.

Let us understand the issue in full detail and guide you clearly.

Basic Rule – One PPF Account per Individual
As per rules, an individual is allowed only one PPF account in their name.

A guardian can open only one PPF account per minor child.

The guardian can also have one PPF account in their own name.

So, if you have only one PPF in your name and one for your daughter (as a minor), that is allowed.

There is no rule violation in holding both.

Problem only arises if you open more than one PPF for the same person or more than one minor account for same child.

Since you opened just one for her and one for yourself, you are well within rules.

So far, there is no need to panic. You have not violated the rules till now.

Guardian’s Role in Minor PPF – Key Points
As the official guardian, you are legally allowed to open and operate the PPF account of your daughter.

You can make contributions, withdrawals, and handle all paperwork till she turns 18.

Even though you never claimed tax benefits, that does not change the legal status.

Tax benefit claim is optional. It does not impact the account legality.

What matters is that you operated the account as a guardian, not as owner.

Till she becomes major, all operations must be through guardian.

Withdrawal Rules from Minor’s PPF
A guardian can withdraw from minor’s PPF account using Form C.

The withdrawal should be for the benefit of the minor child.

Since you are using the funds for her higher education, the purpose is valid.

It is best to keep evidence of college admission and fee payment.

This supports your claim that money is being used for her.

You may withdraw and transfer to your SB account as guardian.

From there, you may pay the college fee.

There is no rule that says it must be transferred to minor’s SB account.

There is no restriction in using guardian’s SB account for benefit of the minor.

Why Some Banks Create Confusion
Many bank officials are not fully aware of PPF rules.

They may raise concerns fearing rule violations.

Some over-cautious staff discourage guardian withdrawals to avoid responsibility.

But such caution is unnecessary if all documents are in order.

What matters is that money is used for child’s benefit.

Also, remember that rules are with Ministry of Finance, not individual banks.

Bank is only a facilitator, not the authority.

So you can educate them with proper clarity if needed.

What Happens When Child Turns Major?
Once your daughter turns 18, she becomes the legal holder of the PPF.

You, as guardian, lose rights to operate the account.

A formal application must be made to change status from minor to major.

This includes her PAN, signature, and KYC details.

A new SB account in her name is also required.

From that point, she handles the PPF independently.

You can’t withdraw or contribute as guardian after she becomes adult.

Once updated, she may operate and withdraw money herself.

There is no legal issue in this process.

Should You Wait Till She Turns 18?
If the fee can be managed from other funds this year, waiting is safer.

Once she turns major, you can transfer funds to her account directly.

That avoids any conflict or confusion at bank branch level.

You can ensure better compliance and reduce chances of being questioned.

If first-year fee is urgent and cannot wait, you can still withdraw now as guardian.

Keep documents and payment receipts ready.

Attach a declaration that this is for her education purpose.

That acts as a proper safeguard in case of any query.

There is no penalty for guardian withdrawal if done properly.

What Not To Do
Do not withdraw the full amount unless needed.

Withdraw only the required amount for now.

Avoid large lump-sum transfers to your account unless needed.

That may raise questions from income tax or bank compliance teams.

Avoid cash withdrawal. Always use digital transfer to pay college fee.

Do not close the account unless absolutely necessary.

Even after age 18, she may continue with PPF if needed.

What to Do Next Year When She Turns 18
Apply to bank to convert PPF status from minor to major.

Provide her PAN card, Aadhar card, and signature specimen.

Open a new SB account in her name if not already.

Submit application to update records at PPF branch.

Once status is updated, she becomes the account operator.

From then, all deposits and withdrawals should be in her name.

No need to worry about any guardian signature after that.

This way, you remain fully compliant.

You can guide her on how to use the money wisely.

Do Not Worry About Tax Scrutiny
Many parents fear income tax notice for multiple PPF accounts.

But in your case, you did not break rules.

One PPF in your name and one as guardian is allowed.

You never claimed tax benefit for her account, which further reduces scrutiny.

Also, the PPF amount is tax-free on maturity.

So there is no tax event at time of withdrawal.

Only care needed is to use it for child’s benefit.

That keeps your position strong and fully in control.

Your Planning is Highly Appreciated
You started this savings when she was very young.

You continued it with discipline for over a decade.

Now, it is fulfilling the purpose it was meant for.

Many parents fail to plan so early.

Your approach is a model for others.

Do continue to guide your daughter on how to save and plan too.

Final Insights
You are well within the rules. No panic is needed.

Guardian withdrawal is legally allowed if for child’s use.

If possible, wait till she turns 18 for full withdrawal and clarity.

Else, withdraw now with proper documents and use.

Avoid misinformation or fear from bank staff.

You have planned well. Now execute it smoothly.

Help your daughter take control of her finances from here.

Encourage her to continue investing after college too.

That ensures financial independence and peace for her future.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |9383 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

Money
I have worked in India over 15 year and the company that I worked had deducted my PF from my salary and deposited in my PF account. 9 years back I left the job in India and relocated to Dubai. I didn't withdrew my PF and till certain period I was able to see my PF balance. Later I forgot about it and now when I try to login to my account, it doesnt allow me to login as my Aadhaar account was not linked to my PF account. I reached out to my employer and submitted all documents as suggested by my employer to activate my PF account and link my Aadhaar to my PF account . My question is, is it ok to keep my money in PF account until I turn 60/retirement age and withdraw the amount and take benefit of the pension fund. Or should I withdraw the amount now and invest it in FD or MF. I had not withdrawn my PF fund because I was aware that PF allow only 2/3rd of the PF fund to be withdrawn and 1 /3rd remain in the account under pension scheme that we receive as pension after retirement.
Ans: Your situation is quite common among professionals who have relocated abroad. It's great that you are considering your options wisely. Let's explore your options and see what might work best for you.

Understanding Your Provident Fund (PF)
Your Provident Fund (PF) is a long-term savings scheme to provide benefits during retirement. You have a significant amount accumulated from your years of service in India.

Keeping Money in PF Until Retirement
Leaving your money in the PF account until retirement has certain advantages.

Benefits of Keeping Money in PF
Safety and Security: PF is a government-backed scheme, offering high security.

Tax-Free Interest: Interest earned on PF is generally tax-free until withdrawal.

Regular Pension: Upon retirement, you will receive a regular pension from the Employees’ Pension Scheme (EPS).

Potential Drawbacks
Lower Liquidity: Funds are locked in until you reach retirement age, limiting access.

Inflation Impact: The fixed interest rate may not always keep pace with inflation.

Withdrawing PF and Investing Elsewhere
Alternatively, you can withdraw your PF and invest it in other instruments like Fixed Deposits (FD) or Mutual Funds (MF).

Benefits of Withdrawing and Investing
Higher Returns Potential: Mutual funds, especially equity funds, have the potential for higher returns.

Diversification: Investing in different instruments can spread and reduce risk.

Liquidity: Investments in mutual funds and FDs are more liquid, allowing easier access to funds.

Risks to Consider
Market Volatility: Equity mutual funds can be volatile and subject to market risks.

Tax Implications: Withdrawals from PF before 5 years of continuous service are taxable.

Evaluating Fixed Deposits (FD)
Fixed Deposits (FD) are a safe investment option but have their own pros and cons.

Benefits of FDs
Safety: FDs are low-risk and provide guaranteed returns.

Fixed Interest: You know exactly how much interest you will earn over the term.

Drawbacks of FDs
Lower Returns: FDs typically offer lower returns compared to equity mutual funds.

Taxable Interest: Interest earned on FDs is taxable, reducing net returns.

Evaluating Mutual Funds (MF)
Mutual funds can offer better returns, especially if you choose actively managed funds.

Benefits of Mutual Funds
Higher Returns Potential: Over the long term, mutual funds, especially equity funds, can provide substantial returns.

Professional Management: Fund managers handle investments, aiming to maximise returns.

Diversification: Mutual funds spread investments across various assets, reducing risk.

Disadvantages of Index Funds
Average Returns: Index funds mimic market indexes and provide average returns, which may not be optimal.

Lack of Flexibility: They cannot adapt to market changes like actively managed funds can.

Less Protection in Downturns: Index funds cannot avoid poorly performing sectors or stocks.

Choosing Between Direct and Regular Funds
When investing in mutual funds, it’s important to choose between direct funds and regular funds.

Disadvantages of Direct Funds
No Advisory Support: Direct funds lack guidance from a Certified Financial Planner (CFP).

Time-Consuming: Managing and choosing the right funds requires significant time and knowledge.

Higher Risk of Missteps: Without professional advice, the risk of making suboptimal choices increases.

Benefits of Regular Funds
Professional Guidance: Investing through a CFP provides expert advice tailored to your goals.

Regular Monitoring: A CFP regularly reviews your portfolio, making necessary adjustments.

Optimised Portfolio: CFPs ensure your investments align with your risk profile and goals.

Deciding the Best Course of Action
To decide whether to keep your PF or withdraw and invest, consider the following:

Personal Financial Goals
Time Horizon: If you have a long-term horizon, mutual funds might be suitable for higher returns.

Risk Tolerance: Assess your comfort level with market volatility and risks.

Financial Needs
Liquidity Needs: Consider if you need access to funds before retirement.

Tax Considerations: Evaluate the tax implications of withdrawing your PF and the tax benefits of other investments.

Conclusion
Deciding whether to keep your PF until retirement or withdraw and invest in other options depends on your financial goals, risk tolerance, and need for liquidity. Keeping your PF offers security and a regular pension, while withdrawing and investing in FDs or mutual funds could potentially offer higher returns. Consulting with a Certified Financial Planner can provide personalised guidance and help optimise your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Adarsh Rai  |12 Answers  |Ask -

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Asked by Anonymous - Jun 11, 2025Hindi
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Hi. I am currently 29. Married with no kids. Wife not earning. Planning for a kid this year. Monthly earning 60k post tax. Have savings of 2 lakhs. Have personal loan of 9 lakhs. Monthly expenses 40k including emi's. I have lost interest in job and I don't want to work anymore. I want to do business which can give monthly 50 to 60k income. Max I can invest 2lakhs. Is there any business which I can start with 2 lakhs and generate monthly income of 60k ? I am frustrated with working under an employer. I want to start my own venture. Please suggest.
Ans: Spandan, pause before you mail the resignation.

Your maths
60 k take-home
40 k spends (15 k of that is EMI on a 9 L loan)
→ 20 k buffer

A newborn will nudge monthly costs up by 8-10 k. Cash cushion shrinks fast.

So the plan must earn while you learn, not leap blind.

Keep the paycheck six more months.
Use evenings to test micro-ideas. Risk stays capped at ?0 for now.

Choose a “cash-this-month” niche, not a moon-shot.
Pick work that turns inventory ≤ ?50 k into sales inside 30 days.

Tiffin + office snacks (two dishes, 40 boxes) - ?25 k utensils, ?10 k FSSAI, ?5 k flyers - ?120 per box × 40 = ?4.8 k /day

Amazon / Flipkart reselling (phone cases, cables) ?40 k stock, ?15 k ads 25 % net margin on ?2 L monthly sales = ?50 k

Weekend print-on-demand & personalised gifting kiosk ?45 k heat-press kit (other options are there too) ?300 profit per mug × 200 pcs → ?60 k Bring Your Mug - Take Away Memories.

Local social-media management for clinics & salons ?0 gear, ?3 k Canva Pro ?8 k-?12 k per client; 6 clients hit target

None need heavy staff or rent. All can run beside your day job.

Set one simple goal: ?15 k profit by Day-30.
Hit it twice, raise target to ?35 k. Only when side income beats salary three months straight do you quit.

This is critical - Plug leaks early. Refinance personal loan to longer tenor; shave EMI to ~?10 k.

Park 1 L of savings in an emergency account—no touch.Skill up tiny, daily.
Watch a YouTube on ad copy, take a WhatsApp course on GST filings. Low cost, immediate payback.

Start small, sell fast, reinvest every rupee. Freedom comes, but by steps, not by one loud jump.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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