20 February 2013
A business person states that he is investing 1 lakh each in 3 PPF accounts. The accounts are in his name, his spouse's name and in the name of 1 major son. Hence, he invests 3 lakhs total per annum! He invest from his account and is not claiming any Income Tax benefit (except from the one lakh that he invests in his own name). Hence, for the balance 2 lakhs that he invests in the name of his spouse and major son, he does not claim any income tax benefit. He is doing it to get a tax free retirement income for himself and to give a decent amount to his grand children. Is it permitted officially?
I am aware that 1 lakh is the maximum investment per year allowed in one's own account plus his minor child's account. But I was not aware that one could invest additional one lakh each in a major son's account and spouse's account. So, if this person had a spouse and 3 major children, he could invest upto 4 lakhs per year and he could amass a huge tax-free retirement corpus!!
CAclubindia
