There’s a joint Public Provident Fund (PPF) account in my minor son and husband’s name. Can gift cheques in my son’s name ( ₹5,000) be deposited in this account? Also, can this amount contribute to the savings of ₹1.5 lakh under Section 80C?
A PPF account can’t be opened in joint names. So, in your minor son’s account, your spouse will be the guardian and not a second holder.
You can deposit the gift received by your child in his PPF account. The interest earned at the end of the year will be clubbed in the hands of the parent who has a higher taxable income. The guardian can consider the minor’s invested amount as part of his contribution and include it under Section 80C of the Income-tax Act.
However, the eligibility of your spouse to contribute in the PPF account of your minor son as well as his own account will be capped at ₹1.5 lakh.
I am 25 years old and earn ₹40,000 a month and my expenses come up to ₹20,000. I had taken an education loan of ₹6 lakh, which I have been repaying for the past four years. I want to create a short-term portfolio where I get returns every year, and a long-term portfolio as well. I also want to pay off my loan in the next two years. Are these financial goals achievable?
You are currently earning ₹40,000 per month. And from this income, the fixed expenses are your monthly repayment of education loan and the monthly expenses of ₹20,000. This does not leave you with too much surplus. However, subject to the cash flows available, you can plan to invest for short as well as long term. The short-term cash flow need has to be invested only in a secured asset class and depending on an equity for regular income is not recommended as this asset class is meant only for long-term investments. Equity can be used to invest for your long-term portfolio. For the short term, you can invest in a bank deposit from where a regular income can be generated via interest.
Surya Bhatia is managing partner of Asset Managers. Queries and views at firstname.lastname@example.org