Tax Query: Can a HUF have its own PPF account?

I have two PPF accounts, one under my name and another one for my son under my guardianship. Both our accounts are linked to my Permanent Account Number (PAN). My husband and I claim the full PPF benefit under section 80C. We are planning to register a Hindu Undivided Family (HUF) soon. If the HUF invest the money in my son’s PPF account, will it be eligible for deduction under 80C? If yes, can I claim a deduction of Rs 3 lakh since my PAN is linked with my son’s PPF account too?  Also, can the HUF be the guardian in my son’s PPF account, once the HUF is registered and has a PAN? 

In case your minor son is a member of the HUF and the HUF contributes towards his PPF account, the amount contributed will be eligible for deduction in the hands of 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 guardian as their contribution. In this case, the mother is the guardian and the amount will be clubbed as her contribution under section 80C. But, the overall deduction limit under section 80C will not exceed Rs 1.5 lakh in a given financial year. So, you will not be able to claim more than Rs 1.5 lakh for your and your son’s PPF contribution. 

While a HUF is allowed to contribute and claim a deduction for the members, it is not allowed to open its own PPF account and be a guardian for a minor’s PPF account. 

If a HUF contributes to one of the minor’s PPF account, does the contribution amount gets added to the guardian’s PPF contribution whose PAN is present in the minor’s PPF account?

HUF is not allowed to open a PPF account under its name. But, it is allowed to contribute to the PPF account for any of its members and claim the deduction under section 80C of the income tax law. 

If the contribution is made towards a minor member, it will be considered as the contribution of the parent who is the guardian in the minor’s PPF account.

For any clarifications/feedback on the topic, please contact the writer at komal.chawla@cleartax.in

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