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PPF Interest eligible for 80C Deduction?

Sudarshan (Partner) (35 Points)

29 August 2009

Dear Members,

Since interst on PPF A/c is credited/accrues every year and not allowed to withdraw is an reinvestment in the same account, also it qualifies the test of investment U/s 80C. Then why not to claim the interest earned on PPF, not withdrawn as a deduction U/s 80C?

Also it is to be noted that the concept of investment out of total income taxable has been forgone from the provison of section 80C.

Kindly provide your opinion with case law, section if any on the matter.

Thanks

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24 Replies

Shamita (Learner) (410 Points)
Replied 29 August 2009

Intt. on PPF is exempt income.

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RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 29 August 2009

I AGREE WITH SHAMITA.

IT IS AN EXEMPT INCOME NO QUESTION ARISES AS TO IT BEING CONSIDERED U/S 80C.

imkdm (Student) (107 Points)
Replied 29 August 2009

Text of Section 80C (1) says :

1. In computing the total income of an assessee, being an individual or a Hindu undivided
    family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole
    of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in subsection
    (2), as does not exceed one lakh rupees.

2. The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee—

....

(iv) as a contribution by an individual to any provident fund to which the Provident Funds Act,
1925 (19 of 1925) applies;

So Section 80C uses the words "amount paid or deposited" and not the words "amount accrued or credited". Hence Interest on PPF is not eligible for deduction u/s 80C. It shall be exempt income.

1 Like

Singh Ram Malik (CA FINAL STUDENT &Article Assistant) (59 Points)
Replied 29 August 2009

INTEREST ON PPF IS EXEMPT INCOME U/S 1O(11)

AMOUNT DEPOSITED IN PPF EXEMPT U/S 80C

Singh Ram Malik (CA FINAL STUDENT &Article Assistant) (59 Points)
Replied 29 August 2009

PPF INTEREST U/S 80C IS NOT ELIGIBLE FOR DEDUCTION .

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BHAGYESH RAVANGE (C.A Job) (1528 Points)
Replied 29 August 2009

PPF Interest is Exempted.

Anil k (ABC) (36 Points)
Replied 29 August 2009

in the present TAX structure PPF is covered under EEE (exempt,exempt,exempt ) model hence interest on PPF is exempt.

GAURAV JAIN (ca final,cfp,cs,icwa) (176 Points)
Replied 30 August 2009

ppf interest is nt eligible for deduction u/s 80c

bt it is exempted

vikaskamra (CA Final Student) (132 Points)
Replied 30 August 2009

INTEREST ON PPF IS A EXEMPT INCOME

IT SHOULD BE EXCLUDED FROM NET TOTAL INCOME BEFORE CALCULATING ANY TAX

vinod sukumar akiwate (article) (24 Points)
Replied 30 August 2009

Originally posted by :GAURAV JAIN
"	ppf interest is nt eligible for deduction u/s 80c bt it is exempted	"

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Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 30 August 2009

Originally posted by :imkdm
"	Text of Section 80C (1) says : 1. In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in subsection (2), as does not exceed one lakh rupees. 2. The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee— .... (iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies; So Section 80C uses the words "amount paid or deposited" and not the words "amount accrued or credited". Hence Interest on PPF is not eligible for deduction u/s 80C. It shall be exempt income.	"

Further above; I would like to add the word "Contribution by an individual" is important and not "paid or deposited".

Also, till date, I havnt seen any case laws/judgement on 80C. It may be because AO is not interested in disallowing any/such deduction which in any case shall be not more than Rs. 1 lac.

On above thinking, one can always take advantage of section 80C at owns risk.

Thanks and Regards