Archive · 20 Nov 2025
Maximizing Tax Benefits for Children's Investments
A financial educator explains how parents can save money on taxes by investing for their children's future in a smart way.
Instead of investing in their own name, parents should open a minor mutual fund account in their child's name.
This way, the child can use their entire tax exemption limit and long-term capital gains exemption when they turn 18, saving the family a lot of money in taxes.
Opening a minor mutual fund account in a child's name can unlock significant tax benefits for parents
Income generated before the child turns 18 is clubbed with the higher-earning parent's income
After the child turns 18, investments made in their name are legally theirs and taxed in their hands
This creates a potential ₹4.25–₹4.75 lakh tax-free window every financial year for long-term capital gains
A parent investing ₹5,000 per month for 10 years could build a tax-free corpus of ₹10-₹12 lakh by age 18
- Who
- Parents investing for their children's future
- What
- Opening a minor mutual fund account in the child's name to unlock tax benefits
- When
- After the child turns 18
- Where
- India
- Why
- To optimize taxes and create long-term wealth for the child
- Investment Amount
- ₹5,000 per month for 10 years
- Potential Corpus by Age 18
- ₹10-₹12 lakh
- Tax-Free Window per Year
- ₹4.25–₹4.75 lakh
- Tax on Long-Term Gains
- Zero tax in the child's hands vs. possible 10% LTCG tax in parent's name