PPF Investment
Investing in PPF (Public Provident Fund) is considered a safe and tax-saving option. But some of its rules are so strict that even a slight lapse can cause heavy losses. One such case recently came up in the Kerala High Court, where a mother lost the interest of about Rs 6.87 lakh due to depositing more money in the accounts being run in the name of children.
What was the whole matter?
In 1999, a woman from Kerala opened three PPF accounts in the post office, one in her name and two in the name of her minor children. She regularly kept depositing money in all three accounts. Both children turned 18 in 2005 and 2007 respectively, but the mother did not close their accounts, nor transferred them. She kept putting money in the same way as she was doing before.
Post office seized interest
In the year 2017, the post office suddenly sent a letter and told that the amount that the woman has put in the three accounts, Ppf scheme The annual maximum limit is above. According to the rule, a person can deposit the maximum amount in a year by mixing the accounts of himself and his minor children (which was 1 lakh at that time, later increased to Rs 1.5 lakh. The post office seized an interest of ₹ 6.87 lakh due to this violation, which the woman challenged the court, calling it unfair.
What did the court decide?
The Division Bench of Kerala High Court gave a decision in favor of the post office. The court clearly said that when the children were minors, then the deposits made in their accounts will be considered as the deposit of the mother. In such a situation, the total deposit of the three accounts will be added together, and if it is more than the limit, it is a violation of the rules. In such a situation, the government cannot pay interest on deposits more than the limit. In such a situation, the seizure of interest on the additional amount deposited by the mother is completely valid.
What lesson did it give from this?
This decision made it clear that PPF accounts opened in the name of a minor are considered part of the account of the guardian. That is, in every financial year, the total deposit limit (eg 1.5 lakh rupees) is applicable to all the three or all the accounts in all the accounts. If a person accidentally crosses this limit, then the government will not pay interest on that additional amount.