PPF Calculator: Public Provident Fund (PPF) is one of the most preferred long-term investment instruments among the investors who have zero risk appetite. In this investment, the investor not only manages an assured return but it also gets income tax exemption on one’s investment up to ₹1.5 lakh in a particular financial year. But, what about those investors, who have exhausted their ₹1.5 lakh PPF investment limit and they still have surplus amount for investing. As per tax and investment experts, if the investor is married, then opening a PPF account in the name of one’s spouse can be a good option. Experts said that by opening PPF account in the name of spouse, the investor manages to double one’s PPF investment limit, though the income tax exemption limit will continue to remain at ₹1.5 lakh.
Speaking on how PPF account in the name of spouse helps an investor double one’s PPF interest income; Harsh Roongta, Head at Fee Only Investment Advisers said, “If an investor has zero risk appetite and it has exhausted its PPF investment limit of ₹1.5 lakh per annum. Opening a PPF account in the name of spouse is a better option. By doing this, the earning individual will not be able to claim income tax exemption beyond ₹1.5 lakh as source of investment in both accounts is the investor himself. But, PPF has some other features like income tax exemption on PPF interest earned and PPF maturity amount. By, opening PPF account in the name of spouse, the investor will be able to double one’s investment limit from ₹1.5 lakh to ₹3 lakh and will enjoy income tax exemption on PPF interest earned and PPF maturity amount in both PPF account.”
On how income tax rules work in favour of the investor opening PPF accounts both in one’s name and in one’s spouse name; Manikaran Singhal, Founder at goodmoneying.com said, “After investing in spouse’s PPF account, then source of income still continues with the husband and hence its income is added with the husband’s income. But, PPF interest earned is income tax exempted and hence PPF interest earned in one’s spouse PPF account doesn’t get added in the husband’s net income. Similarly, the husband goes on to enjoy the income tax benefit on PPF maturity amount getting accrued in the spouse’s PPF account.”
Singhal said that under Section 80C of the Income Tax Act, PPF investment in one financial year is capped at ₹1.5 lakh and hence the husband will have to lose the income tax benefit on investment in PPF account if he has exhausted his ₹1.5 lakh limit. Otherwise, the husband will get all other benefits in one’s wife’s PPF account that he will be getting in his own PPF account.