At maturity, PPF account can be continued for a block of 5 years

Written by Sandeep Shanbhag | AN Shanbhag | Updated: Mar 30 2009, 04:46am hrs
Taxliablity
My PPF account matured in 2007. As per the rules I could have given a request for renewal for upto a year. Due to oversight this has been missed.

The bank now lets me know that the account cannot be continued.

I would like to let the funds remain in the existing account and allow it to earn tax free interest. I cannot make any further contributions in that account.

Can I open a new PPF account for fresh contributions As per the rules, an individual can have only one PPF account. Can my current PPF account be excluded from that since technically it has matured I understand that withdrawal is an option and not mandatory.

Deven Doshi

As per Sec 9(3) of the PPF Scheme, at its maturity, the account can be continued for a block of 5 years. This facility is available for any number of blocks on expiry of each of the extended periods. The continuation can be with or without contribution. Once an account is continued without contributions for one year, the subscriber cannot change over to with-contributions extension. [Notification F.3(6)-PD/86 dt 20.8.86].

A subscriber, continuing his account with fresh subscriptions, can withdraw up to 60% of the balance to his credit at the commencement of each extended period in one or more installments, but only one per year.

On the other hand, in the case of account extended without contribution, withdrawals can be effected in installments, not exceeding one in a year. The balance will continue to earn interest till it is completely withdrawn.

No new account can be opened if the old one is in extended mode either with or without contributions [MOF (DEA) letter F.7/2/97-NS II dt 9.2.98].

Form-H is to be used to declare the intention of continuing the account with subscription for each extended period. It should be filed before the first contribution is made for the first year. In its absence, the account will be treated as without-subscription extension. Fresh contributions made to such accounts will enjoy neither the deduction u/s 80C nor the interest. [MoF (DEA) 7/21/88-NS-II dt 10.8.90]

When my grandfather expired, his house was sold and the sale value and his investments in shares were divided amongst his heirs. I put my share in hotchpotch of my HUF and started submitting separate tax returns for the same. At that time, my family consisted of myself, my wife, son and daughter.

Am I correct in presuming that myself, my wife and my son were the coparceners, but not my daughter

Now both of my children are married and my son has a son (my grandson). Would my daughter-in-law and my grandson be additional coparceners

You have mentioned about gifts "received" by an individual or by HUF. Can HUF give the gifts

Can my HUF give some shares, debentures or cash as a gift either to my daughter who is married by now or to my wife What would be the tax implications to either of them or to HUF What could be value of such gift every year that I can give to either of them without tax implications

Who are the relatives of HUF

V B Gadkari

1. HUF consists of coparceners i.e., the sons, grandsons and great-grandsons of the holder of the joint property for the time being - three generations next to the holder in unbroken male descent. Female members are not coparceners and have no right to demand partition. The wives and unmarried daughters of male members are entitled to maintenance out of their family property. The senior most member of the family usually manages the affairs of the family and is known as a Karta. However, the wife of a Karta has an equal share with all the coparceners.

Your daughter has ceased to be a member of HUF from the date of her marriage.

2. An HUF cannot make a gift to one of its members. But gifts out of the HUF property may be made by the karta for certain approved purposes such as performing indispensable acts of duty, or for satisfying legal obligations or through affection, support of the family, relief from distress, etc, within reasonable limits. Thus, a father may gift ancestral movable properties of the joint family within reasonable limits, without the consent of his sons for such purposes.

3. The Karta of HUF can give a gift from the HUF corpus to any outsider up to a reasonable extent as long as such a gift is not harmful to the estate of the HUF.

4. Where any sum of money exceeding Rs 50,000 received without consideration by an individual or HUF from any person, the whole of such sum is chargeable to income tax. However, such gifts received from a relative are not chargeable.

I am a salaried person. For the financial year 08-09, my salary income is Rs 9,50,000. My employer has deducted the income tax as per 30% slab.

My short term capital gain tax through transactions in shares was Rs 65,000. Does this income get clubbed with my salary income In that case, will I have to pay the 10% surcharge on the entire income or only on the excess over Rs 10 lakh

Ketan Jariwala

Unfortunately, STCG and taxable LTCG is to be added to your normal income and if this total income exceeds Rs 10 lakh, surcharge @10% of the amount of tax will also have to be paid. You have walked into the 33% tax zone, thanks to your short-term capital gain. The short-term capital gain (STCG) enjoys the concessional flat rate of tax (@15.

The surcharge has to be paid on your entire income and not on the excess over Rs 10 lakh. However, there is a marginal relief. The surcharge payable is limited to income over Rs 10 lakh. Yes, this is a little confusing. Your tax liability will be as per the table.

The surcharge payable by you works out at Rs 19,975, which is more than the Rs 15,000 that is the excess over Rs 10 lakh. Therefore, your surcharge is limited to Rs 15,000 only

If you are in a position to claim any further deductions under Chapter-VIA (Sec. 80C, 80D, etc.) do so before March 31.

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