Lesson 1 of 3 · 7 min
The child trust fund India does not have
No Indian scheme opens a trust for a newborn. Here is what a child can actually hold, and the clubbing rule that undoes most plans to park money in their name.
Somebody in your family has probably said it: put the money in the child's name, open a child trust fund, let it grow untouched until they are eighteen. The first half of that sentence describes something ordinary. The second half describes a British scheme.
India has no government-opened, government-funded account held on trust for a child — not on the small savings list, not from any bank. What it does have is a set of perfectly good accounts a guardian opens and the family fills, plus one tax rule that decides who the interest belongs to.
Myth
“India has a child trust fund — an account the government opens and puts money into when a baby is born.”
False
That describes a United Kingdom scheme, not an Indian one. Sukanya Samriddhi and a PPF account in a minor's name are ordinary accounts under the small savings rules: a guardian opens them, the family deposits every rupee, and no government money goes in. Neither of them is a trust, and there is no third scheme hiding behind them.
| The account | Who opens and runs it | What it is not |
|---|---|---|
| A bank account in a child's name | A parent or guardian operates it while the child is a minor | Not a trust. The guardian operates it; no property has been transferred to anyone to hold |
| Sukanya Samriddhi Account, for a girl child | A guardian opens it before she turns 10 and runs it; she operates it herself from 18 | Not a trust, and not government money — the family deposits all of it |
| PPF in a minor's name | A guardian opens and runs it, and the yearly ceiling counts the guardian's own account and the child's together | Not a trust, and not a second ceiling |
Four numbers behind money in a child's name
- Age until which a Sukanya Samriddhi Account can be opened for a girl
- 10
- Age at which she operates that account herself
- 18
- Most Sukanya accounts allowed in one family
- 2
- Yearly PPF ceiling across a guardian's own account and a minor's
- ₹1.5 lakh
The scheme's own rules set the limit
Until then a guardian operates it on her behalf
With a written exception where twins or triplets arrive in the first two births
One ceiling between them, not one each
This is the rule that quietly undoes most plans to park money in a child's name. Under section 64(1A) of the Income-tax Act, a minor child's income is added to the income of the parent who earns more, and taxed there. The name on the account changes nothing.
Two exceptions exist. Income a minor earns from their own manual work, or from their own skill, talent or experience, stays with the child. So does the income of a minor with a disability specified under section 80U. Everything else — interest, rent, whatever the money produces — lands back on a parent's return.
Sort it
1 / 5
True or false, about money in a child's name in India?
The government opens a trust account for every newborn
Check yourself
1 / 3
Kabir asks
Does India have a government-opened child trust fund, the way the United Kingdom does?
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