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Return ay 14-15 urgent query

Krm91 (Student) (782 Points)

28 July 2014

If a PPF account is opened in name of a minor and on attaining majority can he claim PPF deduction u/s 80C though amount is paid by father each year even after son attained majority. Also when he was minor his father did not include interest on ppf as per clubbing rules in his return yet can the son show interest on ppf as exempt income now onwards in his ITR?

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Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 28 July 2014

1. Interest On PPF is exempt from Income Tax and so is the Maturity Amount.

2. Generally Contibution to PPF is allowed as a deduction, but the deduction is allowed to the contributor.

3. Son can take Interst on PPF in his return of Income under exempt income but he cannot claim deduction of amount contributed in PPF account during the year since the contribution is made by Father.

4. The question as to whether the Son should include Interest on PPF account in his Return even though he has not shown such interest income before shall depend on the AMount of Interest Income and the years left to maturity of PPF.

1 Like

Krm91 (Student) (782 Points)
Replied 28 July 2014

Originally posted by : Hitesh Khanna
	1. Interest On PPF is exempt from Income Tax and so is the Maturity Amount. 2. Generally Contibution to PPF is allowed as a deduction, but the deduction is allowed to the contributor. 3. Son can take Interst on PPF in his return of Income under exempt income but he cannot claim deduction of amount contributed in PPF account during the year since the contribution is made by Father. 4. The question as to whether the Son should include Interest on PPF account in his Return even though he has not shown such interest income before shall depend on the AMount of Interest Income and the years left to maturity of PPF.

cy exempt ppf interest income is around 130000 and its going to mature in 2 years. contribution per year is 100000. since the int on ppf amount is large and also in earlier years it was not clubbed in father's exempt income, can you advise would it be appropriate to include in the son's itr? the son is going to file the return for first time.

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 28 July 2014

PLs Answer two More questions

1. Whether the contribution is being made in cash/ cheque ? (LAst 2 years Contribution)

2. Whether the Contribution is made of the Maximum Amount permissible by Law ie 70000/- or 100000/-

Krm91 (Student) (782 Points)
Replied 28 July 2014

it is maturing on 31/3/16

contribution is made by chrque and permissible amt is 1 lac

ANUBHAV VISHNOI (-) (150 Points)
Replied 28 July 2014

Hi Manasi,

Minor can not take the benefit of exemption of the contribution made by his/her parents as the ultimate contributory is parent.

After getting maority, the income till the date he/she gets majority will be clubbed in the hands of parents and rest amount after mojority would be the income of child.

If father did not include the interest income in his return during minority of child , the child can not include the amount in his return. He can show the interest amount in his return which was accrued to him after getting majority.

I hope this will help you.

Regards

Anubhav Vishnoi

(8750089567)

1 Like

Krm91 (Student) (782 Points)
Replied 29 July 2014

Originally posted by : ANUBHAV VISHNOI
	Hi Manasi, Minor can not take the benefit of exemption of the contribution made by his/her parents as the ultimate contributory is parent. After getting maority, the income till the date he/she gets majority will be clubbed in the hands of parents and rest amount after mojority would be the income of child. If father did not include the interest income in his return during minority of child , the child can not include the amount in his return. He can show the interest amount in his return which was accrued to him after getting majority. I hope this will help you. Regards Anubhav Vishnoi (8750089567)

The son is filing the return for the first time for the year ending 31/3/13 (belated return) and 31/3/14 (return u/s 139(1) ) so he has to show only accrued interest on ppf for these 2 years only or even interest income since he attained the age of 18 (i.e. year 2009)

also since it was not clubbed in fathers hand earlier, will father face any complexity if the exempt income is now shown in the son's itr?

ANUBHAV VISHNOI (-) (150 Points)
Replied 29 July 2014

Hi Manasi,

In case if father did not include minor's income in his ROI then now it can't help it out as the time limit for belated return has been lapsed. So it's better to leave it. Complication may arise if scruity notice is served but it is very rare to an individual at this point of time. Even if notice comes then interest and penalty will be imposed.

Even Minor cannot file income tax return for more than 2 years.

Regards

Anubhav Vishnoi

1 Like

Krm91 (Student) (782 Points)
Replied 30 July 2014

can the ppf yearly contribution of Rs 1 lac be treated as gift to son from relative, i.e. can a query be raised on the son as to how the son has exempt interest income of 130000 without any investment from his side?

ANUBHAV VISHNOI (-) (150 Points)
Replied 02 August 2014

Dear Manni

Want to clarify that under PF Act if an individual (Gaurdian) invest money on behalf of a minor the ultimate subscriber is still minor meaning thereby that the interest income is treated of minor not of gaurdian but due to clubbing provision that income is clubbed in the income of guardian. Hence query if raised on son about the source of money which has been invested in PF would be worthless.

Further want to revise my answer in the previous post. That if father did not include the interest income of minor in his own return then there is no problem as the interest income from PF is tax free and do not form part of total income. Hence question of penalty from income tax department does not arise.

As far as filing of income tax return by the minor is concerned he can file return freely as the quetion of amount not invested by minor himself in provident fund will be useless. And also there is no need to show the money received as a gift.

I think this will clear your doubt.

Regards

Anubhav (8750089567)