QUESTION: I had recently tried to open a PF account for my new born child. But the State Bank of India branch, where I have PF accounts for other family members, declined to open the same on the ground that it is no longer possible to open an account in the name of the minor, though it had been opened for my other minor child a few years ago.
ANSWER: Clause 3 of the Provident Fund Scheme, 1964 (1968) 69 ITR (St.) 5 as amended from time to time reads as under:
“Any individual may, on his behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (hereinafter referred to as the “Fund”) any amount not less than Rs.500 and not more than Rs.70,000 in a year”.
A guardian can open an account in the name of a minor.
Form A, which is the application for opening an account, specifically includes not only the name of the applicant but also the name of the minor child to be signed by the guardian. Rule 9(4) provides for withdrawal of amount from the account of minors on an application from the guardian. Rule 10(3) also provides for loan from the account of the minor on an application from the guardian. Rule 12(5) enables a minor to be appointed as nominee. There has been no change in these rules.
On complaints from many banks and post offices for declining to open accounts in the name of minors, the Reserve Bank of India has issued a clarification vide RBI/ 2009-2010/ 365 dated March 29, 2010, addressed to all banks authorised to operate the PF account as under:
“In view of complaints being received about non-opening of accounts for minor by some agency banks, it is reiterated that as per Rule 3(1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further, it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/ her minor child but not both”.
No doubt, for purposes of income-tax deduction, contribution to the account of the minor child would be clubbed in the hands of the parent, who had contributed the amount, so as to be covered by the ceiling under Sec. 80C, while the contribution by the guardian other than the parent may not be eligible for relief, except in the assessment of the minor himself, where he/ she is so assessable.
It is because Sec. 80C permits relief for contributions made by a parent to a public provident fund under Sec. 80C(2)(v) read with Sec. 80C(4)(a) of the Act, subject to the ceiling which will operate for the aggregate contribution made by him in his and his children's accounts.
The reader can, therefore, point out the Circular to his bank, which is bound to open the account for the minor.
ANSWER: Clause 3 of the Provident Fund Scheme, 1964 (1968) 69 ITR (St.) 5 as amended from time to time reads as under:
“Any individual may, on his behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (hereinafter referred to as the “Fund”) any amount not less than Rs.500 and not more than Rs.70,000 in a year”.
A guardian can open an account in the name of a minor.
Form A, which is the application for opening an account, specifically includes not only the name of the applicant but also the name of the minor child to be signed by the guardian. Rule 9(4) provides for withdrawal of amount from the account of minors on an application from the guardian. Rule 10(3) also provides for loan from the account of the minor on an application from the guardian. Rule 12(5) enables a minor to be appointed as nominee. There has been no change in these rules.
“In view of complaints being received about non-opening of accounts for minor by some agency banks, it is reiterated that as per Rule 3(1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further, it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/ her minor child but not both”.
No doubt, for purposes of income-tax deduction, contribution to the account of the minor child would be clubbed in the hands of the parent, who had contributed the amount, so as to be covered by the ceiling under Sec. 80C, while the contribution by the guardian other than the parent may not be eligible for relief, except in the assessment of the minor himself, where he/ she is so assessable.
It is because Sec. 80C permits relief for contributions made by a parent to a public provident fund under Sec. 80C(2)(v) read with Sec. 80C(4)(a) of the Act, subject to the ceiling which will operate for the aggregate contribution made by him in his and his children's accounts.
The reader can, therefore, point out the Circular to his bank, which is bound to open the account for the minor.
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