Under Section 80C of Income-tax Act, 1961 (IT Act) and individual and HUF can claim maximum deduction of Rs.1,00,000/- from total income by depositing sum as per provisions of the section. Sec. 80C(1)(iv) allows contribution to any provident fund set up by the Central Government and notified, where such contribution is to an account standing in the name of any person specified in sub-section (4). Thus contribution in Public Provident Fund Account (PPF Acc0unt) will be eligible for benefit u/s.80C. Under sub-sec. 4, an individual can make contribution in the name of individual, spouse or minor child of the Assessee. An HUF can make contribution in name of any of its member.
As the maximum limit u/s.80C is Rs.1,00,000/- and as per PPF rules, maximum investment in one account can not be more then Rs.70,000/-; question arises that can an individual invest Rs.70,000/- in his name and Rs.30,000/- in the name of minor child and claim full benefit u/s.80C. We have now to not that Public Provident Fund Scheme, 1968 under rule 3 states regarding limits of subscription to Public Provident Fund Account as :
Limit of subscription:- (1) Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (thereafter referred to as the fund) any amount not less than Rs. 500 and not more than Rs. 70,000 in a year.
This implies that an individual can open account in names of minor child, but the total amount invested in all accounts i.e. his account and account of all minor child, should not exceed Rs.70,000/- during the year.
Any amount in excess of total of Rs.70,000/- will not yield any interest.
Individual without the information usually deposit Rs.70,000/- in their name and Rs.70,000/- in names of their minor children. The banks usually inform the account holders making such deposits that they cannot deposit more then Rs.70,000/-. In order to avoid this situation individuals can open minors account in different bank or post office. But if this come to the knowledge it may refuse to pay interest in additional amounts, though this is a rare chance.
Note: HUF cannot open account in name of minor. PPF Scheme Rules states Non Resident Indians are not eligible to open an account under the Public Provident Fund Scheme:- Provided that if a resident who subsequently becomes Non Resident Indian during the currency of the maturity period prescribed under Public Provident during the currency of the maturity period prescribed under Public Provident Repatriation Basis. So Non Residents cannot open PPF account in name of minor child/children
