According to reports from Mint, taxpayers can claim a Section 80C deduction of up to ₹1.5 lakh for contributions made to their spouse's PPF account, provided the contribution comes from their own income. The key requirement is that the contribution must be made from the taxpayer's own funds, with maintaining an audit trail through banking statements and deposit receipts being essential for substantiating the claim. As reported by tax expert Nishant Shanker of Navraj Global Advisors, the deduction is available only to the person who actually makes the contribution and is subject to the prescribed overall limit.
As reported by Mint, contributions to a spouse's PPF account do not make the individual the owner of the investment. The account legally belongs to the spouse, who alone has complete rights to operate it, nominate beneficiaries, take loans, withdraw funds and receive maturity proceeds. According to Shanker, while the taxpayer may fund the account, the investment legally belongs to the wife, and she retains all rights over the account, including withdrawals, loans, nomination, and receipt of maturity proceeds. The annual contribution to a PPF account cannot exceed ₹1.5 lakh in a financial year, and any excess contribution does not earn interest.
According to Mint reports, the interest accrued and maturity proceeds of the PPF account remain exempt from tax, and the clubbing provisions generally do not have any practical impact on the tax-free PPF interest. However, if maturity proceeds or withdrawals are subsequently invested in taxable assets, the tax implications of the income generated from such investments should be evaluated separately based on applicable Income-tax Act provisions. Shanker noted that while funding a spouse's PPF account may be tax-efficient, the account and accumulated corpus remain the spouse's legal property.
As reported by Mint, when investing across asset classes such as stocks, bonds, debt instruments and Public Provident Fund, taxpayers must adopt a clear strategy to maximize returns and optimize tax savings. Contributing to a PPF account in your spouse's name can be an effective way to build long-term savings while also claiming tax benefits, provided the investment is made with due diligence and in line with legal provisions. Taxpayers should evaluate the tax implications of any subsequent investment of withdrawn funds, particularly in light of clubbing provisions under Section 64(1)(iv), wherever applicable, and maintain a clear audit trail of the contribution.
