I have my own Public Provident Fund (PPF) account and another one for my son under my guardianship. Both have my permanent account number (PAN). My husband and I both use our PPF limit fully and claim deduction too. We have recently registered our Hindu Undivided Family (HUF). If the HUF deposits the money in my son’s PPF account, will that lead to exceeding my PPF limit (to 3 lakh) since my PAN is present in his PPF account? If yes, can the HUF be the guardian in my son’s PPF account by adding the HUF PAN to his account? Please suggest any other legal alternative if available so that all three PPF accounts can be used fully for investment.

—Kashmira Sen

In case the HUF contributes towards PPF of your minor son’s account and he being a member of the HUF, the contribution will be allowed as deduction for the HUF under Section 80C of the Income-tax Act, 1961. However, for a minor’s PPF account, the contribution will be clubbed in the hands of the parent who is the guardian, mother in this case, as her own contribution. Hence, the total deposit in PPF in her account and the minor child account combined together cannot exceed the prescribed limit of 1.50 lakh.

The HUF, while allowed to contribute for its members, is not allowed to open its own PPF account and neither can it be appointed as a guardian for a minor’s PPF account.

If an HUF contributes to the PPF account of one of the minor members, does the contribution (by HUF) get added to the parent’s PPF contribution, considering his/her PAN number is present in the minor’s PPF account as guardian?

—Name withheld on request

HUF is no more permitted to operate a PPF account in its own name. However, an HUF is allowed to contribute to the PPF account for its members and is also eligible to claim deduction under Section 80C of the Income-tax Act.

In case the HUF contributes PPF towards a minor member, it will be considered as part of the contribution of the parent who is the guardian in the minor’s PPF account.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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