Investment in a Minor’s Name

A lot of parents want to invest in a minor’s name, but they don’t know how to do it. Minors are defined as individuals below 18 years of age.

Minors can invest when one of the parents is the guardian. This tailored approach aims at wealth accumulation and instills the habit of saving at an early age.

Open a Bank Account in the child’s name U/G parent’s name 

A prudent recommendation includes establishing a bank account in the child’s name u/g parent’s name.

When the minor attains the age of 18

At 18, the units of the mutual fund vests with the child (who turned 18). It involves some paperwork. This paperwork is to officially make the child the owner and thereafter the parent has no say in investments. The kid who turns 18 can make decisions on his/her investments.

Taxation Based on Guardian’s Bracket

Before 18, Income is clubbed with the guardian’s income and is taxed accordingly. 

At 18, the tax responsibility shifts solely to the child

As per income tax, AY 2024-25, income up to  Rs 2,50,000 is exempted. Since the child does not have any other source of income, his/her returns upto Rs 2,50,000 are tax-free.

Investment Purpose and Focus

Minors may initiate investments for a targeted purpose, such as funding their education. Early ownership of investments catalyzes instilling financial discipline, fostering a sense of responsibility, and cultivating savings habits.

Also Read: How to Invest in Mutual Funds

Conclusion

Investing in a minor’s name can be a powerful way to build wealth for the future for the Minor’s education, marriage etc. At Mutualfundwala, we offer expert guidance and solutions to help you navigate the process smoothly and ensure that your investment is both effective and compliant with regulations.

If you’re ready to start investing in a minor’s name or have any questions about the best options available, reach out to us today.

Our team is dedicated to helping you make informed decisions and secure a bright financial future for your loved ones. Contact Mutualfundwala and take the first step towards impactful investing!