Yes. The investment is held in your child's own name, in a minor account that you operate as guardian until they turn 18. Opening a minor account at Rupeezy is an offline process right now. Write to support@rupeezy.in and the team takes you through it. Once the account is open, buying mutual funds and starting a SIP work the same as on any other Rupeezy account.
How do I open a minor account on Rupeezy?
Minor accounts are opened offline for now. Email support@rupeezy.in with the documents below, and the team will walk you through the rest. Online minor account opening is coming soon.
What you need:
- The minor's PAN. The investment is in the child's name, so it needs their own PAN.
- The minor's birth certificate. Proof of date of birth, and of your relationship as the parent.
- Proof of a bank account in the minor's name. The child must be the holder, and you operate it as guardian.
- Your own Rupeezy account. As the guardian you need to be a Rupeezy account holder yourself.
Opening a regular account for yourself first is straightforward. See how do I open an account with Rupeezy.
Who owns the investment, and who operates the account?
Your child owns it. You operate it.
The minor is the sole holder of the account. A minor account cannot have joint holders, and you are recorded as the guardian rather than as a second owner. Every purchase and redemption is made by you on the child's behalf, and money coming back out goes to the child's own bank account, not yours.
This matters more than it sounds. Money invested in your child's name is legally theirs. When they turn 18 the account becomes theirs to operate, and what they do with it is their decision.
Can I start a SIP for my child?
Yes. Both lumpsum investments and SIPs work normally on a minor account. See how to start a SIP on Rupeezy.
A SIP suits this kind of investing well, because the money usually has a fixed date attached to it: school fees, an undergraduate course, a postgraduate degree. If you are investing towards something specific, Goals on Rupeezy lets you set the target and track progress against it.
Funds bought in a minor account are held in demat form, in the minor's own demat account, exactly as they are for an adult. See why are my mutual funds on Rupeezy held in demat form.
Who pays the tax on the gains?
You do, while your child is a minor.
Income from a minor's investments is clubbed with the income of the parent who earns more, and taxed at that parent's slab. It does not get taxed separately in the child's hands. A small exemption of ₹1,500 per child per year applies to the clubbed income.
Once your child turns 18, clubbing stops. From then on the gains are taxed in their own hands, often at a low effective rate, since a student usually has little or no other income.
The tax treatment is no different from any other mutual fund investment, with the same holding periods, the same equity and debt buckets, the same rates. See how does taxation work for my mutual fund investments.
What happens when my child turns 18?
The account has to be converted from a minor account to a regular one. Until that conversion is complete, the account is frozen for transactions. You can no longer operate it as guardian, and your child cannot yet operate it themselves.
This is worth planning for rather than discovering. If you have a SIP running, or you are counting on redeeming around that time, start the conversion before the birthday rather than after. Write to support@rupeezy.in and the team will confirm the current formalities and documents.
Things to keep in mind
- Account opening is offline for now. There is no in-app flow for a minor account yet, so the process starts with an email to support@rupeezy.in rather than in the Rupeezy app.
- The bank account must be the minor's. Redemptions are paid back to the child's account, not to yours. Third-party money is not allowed in or out.
- Nothing about it is a separate product. Once the account exists, it is the same mutual fund platform, the same direct plans, and the same charges as any other Rupeezy account.
- Plan for the 18th birthday. The freeze at majority catches people out, and the conversion is paperwork, which takes time.
- This is general information, not tax or legal advice. Take a professional's advice on your own position.
A minor can also apply for an IPO from the same account. See can a minor apply for an IPO.