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I already have a PPF account. Can I open another account in my wife's name and invest Rs 1.5 lakh?

You can open the PPF account in your wife's name and invest Rs 1.5 lakh per annum on her behalf. However, the money given to your wife will be clubbed to your income.

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Updated: Dec 17, 2019, 05.09 PM IST
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The interest and maturity amount of PPF is exempted from Tax.
I am a government employee and invest Rs 1.5 lakh in Public Provident Fund (PPF) every year. My wife is not working. Can I open a PPF account in her name and invest Rs 1.5 lakh for her? I don’t want any tax benefits.

Ankur Choudhary, Co-Founder and CIO, Goalwise replies: "Yes, your wife can have a PPF account in her name and you can invest Rs 1.5 lakh on her behalf. Under the income tax laws, income from money given to a spouse is clubbed with the income of the giver. But since the interest and maturity amount of PPF is tax free, there will be no tax implications for you."

I am a 66-year-old housewife. I bought a plot in my village in April 2012 for Rs 2 lakh. I now intend to sell it for Rs 5 lakh. What will be the tax implications for me?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: "The transfer of land is subject to capital gains tax. However, definition of capital assets excludes rural agricultural land and any gains from its sale is not taxable. Rural agricultural land is defined as land which is outside the jurisdiction of a municipality or cantonment board, having a population of 10,000 or more as per the last census. Also, such land should not fall within 2 km (to be measured aerially) of the local limit of the municipality if its population is between 10,000 and 1 lakh; 6 km of the local limit of the municipality if its population is between 1 and 10 lakh and 8 km of the local limit of the municipality if its population is more than 10 lakh. However, if the land is not a rural agricultural land, the long term capital gains on its transfer would be chargeable to tax at the rate of 20% (plus surcharge and cess). The cost of land would be indexed to account for inflation as per the cost inflation index for the year in which it was purchased. As a housewife and senior citizen, you will be eligible for minimum exemption limit of Rs 3 lakh and also for applying any part of this unused exemption against the capital gains and would be liable to pay tax only on the balance amount."

My minor grandson got a bank deposit made as part of the alimony being paid by his father. The interest income is drawn by his mother to pay his school fees. The bank adds this interest income to his mother’s income and deducts tax at source. As the income is purely to meet a minor’s school fees etc, I want to know if there is any provision to get income tax exemption on such income.

Shubham Agrawal, Senior Taxation Advisor, TaxFile.in replies: "The income of a minor is clubbed with that of the parent who has the custody of the child. The concerned parent can avail a deduction of Rs 1,500 per child u/s 10 (32). There is no further concession available on such clubbed income. It will need to be included in the total income of the parent and taxed at the applicable slab."
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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