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Ppf of minor child: both parents can claim 80c??

Pramod Pillai (Advocate) (78 Points)

24 June 2016

Dear Experts,

One person has three minor children.He has opened PPF account for all the three children with his name as guardian.

1, What will be the maximum amount deposited in the three PPF account??

2,Can both father and mother deposit in their account and claim 80C?

3,If both mother and father depositing,what will be the maximum deposit can deposit in all the three accounts individually and together?

4,The age group of the kids are 9 yrs,4 yrs & 1 years .what will be the ideal deposit proportion??

Thanks In advance.

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5 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 24 June 2016

PPF account can be opened in the names of minor children
Max. amount under PPF scheme is Rs.1.5 lacs
Both the parents can have separate PPF accounts (to the extent of Rs.1.5 lacs in each case) and deduction u/s 80C would be limited to Rs.1.5 lacs in each case.
As I understand, proportional investment in respect of each child is not relevant. What is relevant is the total amount deposited in the account.

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Pramod Pillai (Advocate) (78 Points)
Replied 24 June 2016

Many thanks Ms.Poornima,

But my doubt is the guardian of the Children is father in the passbook.

Can the father Invest Rs.1,50,000/- and the mother Invest Rs.150,000/- in the childrens account??

Is there is any chance to deny the Interest because the deposit amount exceeds Rs.1,50,000/- while considering the father side as he is the guardian?

CMA Poornima Madhava (CMA) (13112 Points)
Replied 24 June 2016

Deduction u/s 80C is available in respect of PPF in the name of individual or spouse or child. So what I understand is that father and mother can make deposits in the name of child and both can claim Rs.1.5 lac deduction separately. Also I think the limit of Rs.1.5 lacs is with respect to the person who is making investment in PPF. Thus, father (cum-guardian) as well as mother can separately invest Rs.1.5 lacs each provided both of them are assessed separately in respect of their income,

Pramod Pillai (Advocate) (78 Points)
Replied 24 June 2016

Hi Ms.Poornima

My doubt is not regarding the claim of 80C. My issue is whether the bank deny the interest as it is limited to 1.5lakhs for an individual including the minor children.

Thanks

CMA Poornima Madhava (CMA) (13112 Points)
Replied 24 June 2016

Your query is quite confusing. What I said is father can invest Rs.1.5 lacs in the name of child and mother can also invest Rs.1.5 lacs in the name of child (assuming both father and mother pay income tax on their respective income), as there is no such restriction on limit with respect to the beneficiary. Moreover, in this case, it will be 2 different PPF accounts. Since both of them are investing within limits, what is the deviation? Moreoever, bank has no right to deny interest because taxation of interest is not within the scope of bank and it is covered by Income Tax Act.

Also please note the maximum that can be invested under PPF scheme by a person is Rs.1.5 lacs. This limit is not imposed by Income Tax Act. The limit comes into picture only for the purpose of deduction u/s 80C.

Hope I have answered to the point.