Can mother and father both contribute in PPF account of their minor daughter? The PPF acount was 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. Neither of us need to claim deduction under Section 80C.
By Balwant Jain, Chief Editor, ApnaPaisa
As per paragraph 3 of the Public Provident Fund scheme, 2019 a parent can open a Public Provident Fund account in the name of a minor. Please note not more than one account can be opened in the name of a person. Under the PPF scheme, 2019 there is no restriction on any of 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.
Even there is a limit of ₹1.50 lakh beyond which money can not be deposited in one account. So contribution to the PPF account of your one daughter made by you and your wife both together can not exceed the threshold limit of 1.50 lakh rupees.
The limit of 1.50 lakh is applicable whether you wish to claim the benefit under Section 80 C or not, for contribution made to the PPF account of your daughter.
As far as the entries for contribution and interest in your books of accounts are concerned, the contribution can 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 parents.
Please note that 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 ₹1,500 in a year. Since interest on PPF account is tax free the same can be disclosed in the EI schedule of the ITR.
(Views as expressed by the expert)