In accordance with the provisions of s. 80C(2)(i) and cl. (iv) of the IT Act, 1961, an HUF is entitled to relief; s. 80C(4)(a)(ii) provides that in the case of HUF, the investment can be made in the name of any member of the HUF.
I invite your kind attention to Notification No. GSR 289(E) dt. 13th May, 2005 issued under NSC (VIII issue) AMDT. Rules, 2005 and Notification No. GSR 291(E) dt. 13th May, 2005 issued under PPF (AMDT). Scheme, 2005 dt. 13th May, 2005, investment in case of HUF stands now withdrawn.
Kindly advice as to whether these amendments will apply to the above provisions of the IT Act and accordingly HUF will not be entitled to any deduction under s. 80C on these investments or investment by any member of HUF for the HUF shall continue to be entitled as before.
An early reply is solicited.
In respect of notification dt. 13th May, 2005 referred to by querist, has been given “Sequel to amendments to various small savings schemes to restrict the scope of investments only to individuals, the accounts, if any, opened by juristic persons (HUFs, trusts, provident funds, etc.) i.e., persons other than individuals on or after 13th May, 2005 under any of the small savings scheme including Public Provident Fund Scheme, 1968 shall be treated as void ab initio and immediate action should be taken to close such accounts and to refund deposits without any interest to the depositors. It may, however be noted that the above amendments shall not be applicable to the existing accounts opened in accordance with the rules in operation prior to the amendments dt. 13th May, 2005. These shall continue till maturity and deposits/withdrawals in/from these accounts shall be allowed to be made in accordance with the said rules. However, any extention of existing accounts shall be subject to the amendments dt. 13th May, 2005.
It is obvious that what is prohibited by amendments dt. 13th May, 2005 is opening of PPF account in the name of HUF with effect from the above date and PPF accounts opened prior to that date in accordance with rules operative prior to that date would continue to be operative and deposits in and withdrawals from them would continue to be made. It follows that deposits permissible under s. 80C can be made in those accounts as far as asst. yr. 2006-07 is concerned.