We both the spouses are tax payers. Can we both contribute in PPF account of our minor daughter. If yes how the entries for contribution and interest be made in the books of father and mother. We do not need to claim deduction under Section 80 C.
Answer: As per paragraph 3 of the Public Provident Fund (PPF) scheme, 2019 a parent can open a Public Provident Fund account in the name of a minor. Under the PPF scheme, 2019 there is no restriction on any of parent or both the parents contributing to the PPF account of a child.
As per paragraph 4 of the scheme, an individual can contribute not more than ₹1.50 lakh to his PPF account and the PPF account of the minor/s taken together. So while contributing to your own account, you can also contribute to the PPF account of your daughter as long as the aggregate of all the deposits by each one of you does not exceed the threshold of Rs. 1.50 lakh for contribution made to own account and PPF account of your daughter. Even there is a limit of Rs. 1.50 lakh beyond which money cannot be deposited in one PPF account. So contribution to the PPF account of your one daughter made by you and your wife both together cannot exceed the threshold limit of ₹1.50 lakh.
The limit of Rs. 1.50 lakh is applicable whether you wish to claim the benefit under Section 80C or not for contribution made to the PPF account of your daughter.
As far as the entries for contribution and interest in your books of accounts are concerned, the contribution can be shown as gift made by you to your daughter in your books of accounts. The entries in respect of interest credited to the PPF account of your daughter will be made in her books and it will not at all reflect in the books of the contributing parents.
The writer is a tax and investments expert and can be reached at jainbalwant@gmail.com
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