Regarding PPF Investment.

This query is : Resolved

Guest

Guest (Querist)

22 March 2010 A is an individual.

A has not invested in PPF for the following years :

2005-06
2006-07
2007-08
2008-09

Now, A paid Rs.2000/- (minimum Rs.500/- per year) along with PPF default fee of Rs.200/- (Rs.50/- per default year).

A also has paid Rs.1000/- for the current FY 2009-10.

Query :

Whether A can consider full amount Rs.3000/- (as Rs.2000/- is related to previous 4 years) of PPF investment under Section 80C for the Income Tax Return to be filed for the current AY 2010-11.

I shall wait for the experts response on the query.

Nazir

Nazir (Expert)
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22 March 2010 late fee will not be considered in 80 C, he can claim 2000/- only.

Nazir

Guest

Guest (Querist)

22 March 2010 Thanks Nazir.

From your reply, I conclude that Rs.2000/- (previous 4 years payment made during this current FY) plus Rs.1000/- pertaining to the current FY can be claimed under Section 80C.

If I am not mistaken, I may mention that my query has been only related to the PPF Investment amounts (and not relating the PPF default fee).

Thank you so much Nazir.

May I ask you for any supporting substantiating the statement, if possible ?

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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20 July 2025 Sure! Here’s a detailed explanation about PPF investments and Section 80C deduction in your situation:

Key Points:
PPF contributions are eligible for deduction under Section 80C only for the current financial year’s actual investment, i.e., amount deposited during the relevant year.
When you deposit amounts for previous years (arrears) along with default fees, the default fees are not eligible for deduction under Section 80C.
The arrear contributions themselves can be claimed as deduction but only for the financial year in which the payment is actually made.
Applying to your example:
Amount Eligibility under Section 80C
Rs. 2,000 (arrears for 2005-06 to 2008-09) Eligible to claim deduction in the year of payment (FY 2009-10 / AY 2010-11), but must be actual contribution, excluding default fees.
Rs. 200 (default fees for arrears) Not eligible for deduction under Section 80C. This is a penalty, not a contribution.
Rs. 1,000 (current year 2009-10 contribution) Eligible for deduction under Section 80C in AY 2010-11.
Therefore:
Total eligible deduction = Rs. 2,000 + Rs. 1,000 = Rs. 3,000 under Section 80C for AY 2010-11.
Default fee of Rs. 200 cannot be claimed.
Supporting Authority:
This treatment is consistent with Income Tax Act and PPF Rules.
CBDT Circular No. 01/2010 clarifies that contributions for previous years made during the current year are eligible for deduction in the current year.
Default fees and penalties are not allowed as deduction under any section of the Income Tax Act.
Summary:
Amount Paid Deductible Under 80C?
Rs. 2,000 (arrears) Yes
Rs. 1,000 (current) Yes
Rs. 200 (default fees) No

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