Can HUF claim Deduction u/s 80C by contributing to PPF?
Section 80C of the Income Tax Act, 1961 allows a person to claim the Deduction from the Gross Total Income of the individual by way of various payments.
Deduction is available in respect of LIC payments, PPF contributions, Housing loan repayment etc. The question is Hindu Undivided Family (HUF) is eligible for such deductions?
The answer is yes HUF is eligible to claim the deduction in respect of 80C. But the problem is in respect of deduction related to PPF. HUF is not allowed to open Public Provident Fund Account in India. Only a resident Individual of 18 years of age or above can open a PPF account in his own name or on behalf of minor.
This limitation on HUF had been there since May 13, 2005 and any account opened in the name of HUF, prior to May 13, 2005 shall continue till maturity. That account cannot be extended any further i.e. it has to be closed after 15 years.
Now, without opening PPF account how HUF can claim deduction u/s 80C?
In order to claim deduction u/s 80C, HUF can contribute to the PPF account of its members. All the members in family including wife, children, their wives and their children come under the definition of member. While the male members are called coparceners, the females are referred to as members. The senior-most male member is called the karta (manager).
The contribution made by HUF on account of their members shall be eligible for tax deduction u/s 80C of the Income Tax Act, 1961 in respect of PPF.
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