What will happen to the interest earned on the PPF accounts of the children once they turn 18? If there is no contribution then does the interest continue to accrue in the PPF account, especially if the child is pursuing higher studies? Let’s say my son takes four years for graduation and two years for masters, then he will be about 24 years old before starting a job and earning a salary. In such a situation, will his PPF account continue to earn any interest?
After the age of 18, if I contribute to my son’s PPF account, do I need to split it between myself and my account or can I contribute 1.5 lakh more in my PPF account 1.5 lakh in his PPF account too?
—Name withheld on request
As per the extant provisions of Public Provident Fund Scheme, 2019 (PPF Scheme), the minimum annual contribution to PPF account is 500. If any account holder fails to deposit the minimum amount, the account will be closed. However, even in such a situation, the account holder will continue to earn interest on the balance in the closed account at the rate applicable to the scheme from time to time. Interest will continue to accrue on the PPF account even after the minor turns 18. In addition, as per the PPF scheme, the maximum 1.5 lakh can be deposited per year per PPF account. Accordingly, once your son attains majority, you can contribute 1.5 lakh in the PPF accounts of you and your son respectively. However, please note that from the point of view of tax deduction, the maximum limit of deduction in your hand will be limited to 1.5 lakh as prescribed under section 80C of the Income Tax Act, 1961.
I am 36 years old central government employee. I had invested in stock market and applied for IPO. I found 12,300 profited and 71,800 unrealized profit for FY21. Should I disclose this gain as capital gain in income tax return? If it is mandatory, which income tax return form should I submit?
-K. Jaya Krishna
We have assumed that you do not have income from the business. Any gain from the sale of listed equity shares will be taxable as capital gain in the financial year of the sale. Where the listed shares are held for more than 12 months, they will be treated as long-term capital asset and the gain thereon will be taxed as LTCG. If the listed shares are held for 12 months or less, it will be treated as a short-term capital asset and the gains from it will be taxable as STCG.
Any unrealized profit will not be chargeable to tax and will not be reported on your tax return. Also, you need to file your India tax return using Form ITR-2. The details of sale and purchase have to be entered in Schedule CG of Form ITR-2 and Schedule 112A.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG in India.
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