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Can mother and father both contribute to the PPF account opened for minor child?

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Can mother and father both contribute in PPF (Public Provident Fund) account of their minor daughter opened and operated by the minor’s father. If yes, how the entries for contribution and interest be made in the books of father and mother. We do not want to claim deduction u/s.80C.

Answer: As per paragraph 3 of the Public Provident Fund scheme, 2019 any parent or a legal guardian can open a Public Provident Fund account in the name of a minor child. Please note that not more than PPF one account can be opened in the name of a person. Under the PPF scheme, 2019 there is no restriction on any of the parent or both the parents contributing to the PPF account of a minor child.

As per paragraph 4 of the scheme an individual can contribute not more than one lakh and fifty thousand to his account as well as to the account of the minor/s taken together. So while contributing to your own account, you can also contribute to the PPF account of your daughter but aggregate of the deposits by each one of you should not exceed the threshold of one lakh fifty thousand for contribution made to your own account as well as to the PPF account of your minor daughter. Please note that there is an overall limit of Rs. 1.50 lakhs beyond which money cannot be deposited in one PPF account. So contribution to the PPF account of your daughter, made by you and your wife both together, cannot exceed the threshold limit of 1.50 lakh rupees in a year. The limit of 1.50 lakh is applicable whether you wishes to claim the benefit under Section 80 C or not.

As far as the entries for contribution and interest in your books of accounts are concerned, the contribution made has to be shown as gift made by you to your daughter. The entries in respect of interest credited to the PPF account of your daughter will be made in her books and it will not at all reflect in the books of the contributing parent.

Due to clubbing provisions income of a minor is required to be added to the income of parent with higher income. So either you or your wife will have to include all the incomes accruing to your daughter (Including the PPF interest for the year) in excess of one thousand five hundred rupees in a year, in your income. Since interest on PPF account is exempt the same can be disclosed in the EI schedule of the ITR.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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