Tax benefits continue to accrue even after PPF a/c is transferred to another bank
March, 27th 2018
As per the PPF scheme of the government, subscribers can transfer their PPF account from one authorised bank or post office to another.
My wife and I are maintaining two separate Public Provident Fund Accounts with Punjab National Bank’s GK II branch in Delhi. We propose to transfer these accounts to CR Park branch for operational convenience. We are not, however, sure as to whether the benefits from the income tax angle will continue to be available to us subsequent to the proposed transfer? – HP Nag Chowdhury
As per the PPF scheme of the government, subscribers can transfer their PPF account from one authorised bank or post office to another. In such a case, the PPF account will be considered as a continuing account and hence the resulting tax benefits shall continue to be available.
* I have taken loan from bank as well as parents (through cheque) for purchase of a flat. What is income tax rebate for loan from parents? —Sameer Bhoir
You can claim tax rebate in respect of home loan from parents or relative. You can claim tax deduction under Section 24 of the Act on the amount of interest paid by you to your parents or relatives on the home loan. However, your parents or relatives need to pay tax on the interest received by them from you.
* My daughter held a PPF account since 2004. She turned NRI in 2010. She made a contribution of Rs 1.5 lakh to her PPF account in April 2017. Can she avail of deduction for this contribution under Section 80C? What happens to the interest already credited to the account before October 2007? —Anand Patel
Your daughter can invest up to Rs 1.5 lakh per financial year in an existing account, that is, an account that she opened prior to becoming an NRI. The amounts invested in these instruments are eligible for an aggregate tax deduction of up to Rs 1.5 lakh under Section 80C of the Income-Tax Act, 1961, along with other eligible investments. Interest income earned from PPF accounts is exempt under Section 10 (11) of the Act. The government has now made amendments in the PPF scheme, whereby the benefit of investment in such instruments is restricted to resident Indians only. Where such individuals become NRI, anytime during the holding period of such instruments, the PPF account will deem to be closed. Until the time the PPF account is actually closed, the accumulated money will earn interest at a lower rate, which is presently 4% per annum.