Can one person open two PPF accounts?

by Manshu on November 15, 2012

in Tax

Srinivas posted the following question a few days ago:

 

SRINIVAS September 17, 2012 at 10:48 pm [edit]

Can an exclusive article be written on PPF?. Actually, there is lot of confusion on this, despite the popularity of the product . The question is ,whether one individual can open two accounts -one in his name and the other on the name of minor child- and contribute Rs.100000/- to each of the accounts? everybody talks about availability of tax exemption upto Rs.100000/-, but nobody explicitly conforms that contribution can be made to multiple accounts exceeding Rs100000 and claim tax exemption upto Rs1.0 lakhs only.

I think there are two questions here, and I’ll try to break this up and answer each one individually.

1. Can one person open more than one PPF account?

No, you can’t, you can only have one PPF account for yourself except if you want to open one as a guardian of your child.

2. If I can’t open multiple accounts then can I open one for my minor children as their guardian?

You can open another account for your minor children as their guardian but that doesn’t mean that the tax deduction doubles, that still remains applicable as an individual.

As far as I know, it doesn’t double the amount that you can put in these two accounts, so you can’t put Rs. 2 lakhs in the two PPF accounts, for the purpose of calculating the limit, they are treated as one account only. If someone knows this to be different then please leave a comment.

The husband and wife both can’t open an account on the name of the same child, and grandparents can’t open an account for their grandchildren.

Other Questions

Other than these two questions, I see that PPF has a thread on Jago Investor discussion forum and there they have dealt with some questions like how much this money will amount to after 15 years and that’s a good link for further reading.

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{ 37 comments… read them below or add one }

pattu November 15, 2012 at 7:57 am

I have a PPF acc in my name and my sons. My understanding is you can individually deposit a max 1 lakh in each acc per financial year. However the tax exemption will only be a max of 1 lakh.

Also people sometimes assume wrongly calculate the 15 year duration. 15 mar 31st should have passed from the date of start of the account. That is 15 financial years. Sometimes it will amount to 16 ordinary years. If one does not plan this carefully the money will mature after you need it!

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Bhavin November 15, 2012 at 1:56 pm

Dear Pattu, can you please elaborate on the time frame?

I had assumed it would be exactly 15 years from the date of opening the account, for e.g. if account was opened on 15th Nov 2012 then it would mature on 14th Nov 2027.

Are you saying the maturity date would be 31st Mar 2028 for this example?

If possible, give some references to confirm this.

Thanks and regards,
Bhavin.

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Bhavin November 15, 2012 at 2:05 pm

Gosh you are correct about the dates!

From ICICI Bank website: “A Public Provident Fund (PPF) account gets matured after the completion of 15 years from the end of the year in which the account was opened.”
(http://www.icicibank.com/Personal-Banking/investments/ppf/faqs.html)

Thanks and regards,
Bhavin.

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pattu November 15, 2012 at 9:22 am

Sorry I am wrong. Manshu is right, The total limit of investment for both accounts is only Rs. 1 lakh. A search for ‘PPF account child’ gives out several sites which states this.

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Bhavin November 15, 2012 at 2:03 pm

No I think you can deposit 1 lakh in each of the accounts. So for e.g. if you have 2 kids then you can deposit 1 lakh in your own account plus one lakh in each of the kids’ accounts, totaling 3 lakhs in a single year. You may claim tax benefit of only one lakh, of course. Please write back if the above is incorrect; please give references if possible to confirm this.

Thanks and regards,
Bhavin.

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Bhavin November 15, 2012 at 2:22 pm

“Let’s say you open an account for your minor child. You can deposit Rs 70,000 in your account and Rs 70,000 in your child’s account. In this case you can in my opinion take the maximum benefit of Rs. 1,00,000/- U/s. 80C. as Limit of Maximum Investment in a year of 70000/- is fixed by Public provident Fund Act not by Income Tax law.”

[Source: http://taxguru.in/income-tax/public-provident-fund-ppf-scheme-investment-limit-income-tax-benefit-features.html

I would interpret this as follows: The PPF investment limit is 1 lakh per account, while tax benefit limit is 1 lakh per person. The difference is that if a person has 5 minor kids (just for the sake of example) then he/she can invest upto 1 lakh in each of their accounts AND his own account, totaling upto 6 lakhs, but he can get tax benefit of only 1 lakh as per 80C.

Please comment if anyone has a different interpretation.

Thanks and regards,
Bhavin.

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CA Karan Batra November 15, 2012 at 2:28 pm

Hi Bhavin

The link shared by you is not updated

The maximum limit per person has been increased from Rs. 70,000 to Rs. 1,00,000

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Bhavin November 15, 2012 at 4:19 pm

Yes, I know the investment limit is raised from 70K to 100K. I pasted the line from that link directly, simply to illustrate the logic. The figure has changed, but the law and its interpretation hasn’t, as far as I know.

Judging by your name, I think you are a CA. If so, you would definitely know more about this than me, so please step in and help settle the confusion. :-)

Cheers,
Bhavin.

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pattu November 15, 2012 at 3:54 pm

I think you are not correct.
See
http://www.rediff.co.in/money/2007/feb/20ppf.htm

Change the 70 K to 1 lakh.

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Bhavin November 15, 2012 at 4:40 pm

Your link does suggest I am wrong. But I would still like to double check this from a more informed authority.

My point is that I-T dept. laws are different from PPF laws, so it is possible that the Taxguru website interpretation is more accurate.

Note: My interest in this topic is purely academic. I was just surprised by the combined limit, so I thought I’d step in for a deeper look. I don’t have any kids to worry about – yet. :-)

Cheers,
Bhavin.

Reply

pattu November 15, 2012 at 5:22 pm
Bhavin November 15, 2012 at 5:40 pm

Yup, caclubindia gets more marks than Rediff, so I guess there indeed is a combined limit in place. :-)

But what puzzles me is how will the govt. enforce this? I mean, what happens if the parent gives his/her kid 1 lakh as a gift, and the kid then puts that amount in his PPF account? It is perfectly legal, and totally separate from the one lakh that the parent puts in his own account. The kid’s income may be too less to be eligible for taxation, and even if it is clubbed with the parent’s income, there is no negative tax implication because it is a gift and tax-free from parent to child. The tax on the original income has already been paid before it is gifted to the child.

So unless the minor child cannot legally operate his/her account, such a combined investment limit has no practical meaning. Just my 2p.

Cheers,
Bhavin.

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prakash September 24, 2013 at 3:10 pm

Dear Sir,

I have got two PPF accounts , please sugest what to do?

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V.K.GUPTA November 15, 2012 at 9:29 am

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M: 09829006715

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Vinay November 15, 2012 at 10:42 am

Manshu, I plan to open a PPF account shortly, I have one basic question, what is period considered for the limit of 1 lakh a year? If the period is April 2012 to March 2013, I plan to invest 1 lakh for this period.

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Manikaran Singal November 15, 2012 at 11:51 am

Manshu, I have tried to cover most of the things in my article on PPF. Hope your readers will find it useful http://goodmoneying.com/financial-planning/ppf-public-provident-fund

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Santanu November 15, 2012 at 11:58 am

But what is need of another account? I think as per tax savings option 1 lac in PPF is enough. Besides that you can always invest your extra money on gold in any format.

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CA Karan Batra November 15, 2012 at 12:21 pm

Hi Manshu

You’ve touched upon a very practical query. I’ll try to add more insight into the same:-

Legally, you are not allowed to have more than 1 account.

But practically, now that PPF Accounts can be opened in Post Office as well as Banks, people have started opening 2 accounts in their own name – one in post office and another one in banks. While claiming deduction under section 80C, they only claim deduction from 1 account.

The reason why they do this is that PPF Accounts offer a high interest rate and that too Tax Free. Many people have started doing this.

But this thing is not advisable at all as a very heavy penalty is leviable for the same…

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Ramesh November 15, 2012 at 5:07 pm

I think you can deposit 1 lakh each in your and all kids accounts. You can also take IT rebates for all of them if each one has a taxable income separately and is filing a separate IT return. many rich people are making their kids wealthy and also taking IT benefits for them. but this is not for a common man and is rare, but possible and legal. any expert comments?

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ARUN BATRA November 16, 2012 at 12:18 pm

I would like to add my comments as below.

1. It is already mentioned that PPF and income tax rules are from different Government departments. It became popular after series of articles (In the wonderland of investments) were written by Mr A N Shanbaug in the Indian Express. Hats off to Mr Shanbaug for his contributions.
2. PPF scheme was started primarily for self employed individuals about 5 decades back when there were very few investors and very few investing opportunities.
3. PPF rules say that an individual can open only one PPF account.
4. The income tax rules among other savings include PPF as a qualifying investment for rebate under section 80C. The payments towards PPF a/c of spouse/ children also qualify for rebate.
4. No where I have seen any Government notification regarding admissibility or non-admissibility of operating/ making investments in more than account. Statements/ advice of various experts are their own interpretations. In my opinion, the restriction regarding having only one account was to ensure that it being a social security scheme should not end up in an opportunity to rotate the investment between PPF accounts having different maturity dates.

Further, I would advise the readers to consider PPF more as a social security scheme rather than an investment opportunity. I opened my PPF account in 1978-79 and have rolled it over
repeatedly after initial 15 year tenure. Today, when I am on the wrong side of 60, I have decent amount in my account with decent tax free income. I have reasonable liquidity and can withdraw amount per my requirement. With nomination facility, my nominee will have no difficulty in transferring the money.

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Arnab January 14, 2013 at 3:54 pm

Hi Sir,

I had missed yor comments before posting. from your comments it’s quite obvious and seems practical to refrain from oppening more than single PPF a/c. Still I would like you to have a look on my query just down below and give your valuable suggestions. Furthermore pls do elaborate on transferring PPF a/c from a Post Office to an SBI branch. As you would be knowing the trouble one faces while depositing a bulk amount in cash in a PO without any cheque facility , when, on the other hand you get clear visibility and other transaction facilities in banks.

Thanks in advance.

Warm regards,
Arnab

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Roy November 26, 2012 at 10:19 pm

Sir,
I AM HIGHLY IMPRESSED WITH YOUR COMMENTS & DIFFERENT ARTICLE
I have 2 queries :
1. Can i show the full amount of Rs.100000 i.e Rs. 40000 which was deposited in (11-12) and Rs. 60000 deposited in (12-13) for tax exemption for (12-13). I mean can i show the full amount stored in PPF or i have to show only the amount of Rs. 60000 for 12-13 ????

2. Also can i only exempt a total of Rs. 100000 fro my income tax. (including Room Rent, 80C, LIC) etc ???

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ARUN BATRA November 27, 2012 at 6:29 pm

1. You are eligible for claiming rebate under section 80C for savings made under various heads during Apr-Mar period of the specified year. PPF is one of the schemes/ heads for which rebate qualifies. Same statement made in other way would mean savings of 2011-12 cannot be clubbed with savings of 2012-13
2. Among schemes mentioned in you query – PPF and LIC payments qualify for rebate under 80C with ceiling of Rs 1 lakh. Deductions towards rent are governed by different set of rules and have no link with 80C

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Arnab January 14, 2013 at 3:38 pm

Hi All,

I have a very long pending query within me which I could not get any fitting/confirm answer for.
My question is “Can I open a 2nd PPF a/c while maintaining an existing PPF a/c, provided, I maintain the first one with a local Post Office and now I would like to go for a fresh a/c with say SBI ?”
Now, there is a specific context behind such seemingly unusual requirement which I would try explaining:
From last 4/5 yrs I have been maintaining a PPF a/c with a Post Office in my native and remote place. The postal staffs, on being asked several times, have confirmed me that there is NO provision to get my PPF a/c TRANSFERRED to an SBI branch, however the transfer is possible to any other P.O. in India. But, I actually got to know that any kind of transfer is possible by submitting a particular form (I forgot the name).
Now what I want is to keep the PPF a/c in the post office as it is and to stop further depositing in the same. Instead, I would like to create a fresh PPF a/c with an SBI branch and would continue maintaing this one in terms of further investments.
Somebody confirmed that the scenario i.e. openning multiple PPF a/c is absolutely fine, but , only that I will get tax benefit and the interest accumulation on a maximum cap of Rs. 1lakh annually.
Some other told it will be against law and I might get into trouble.
Now, as I can see this is such a nicely interactive and lively forum, I would request you all to throw some light on this.

Warm Regards,
Arnab

Reply

ARUN BATRA January 20, 2013 at 10:25 am

Arnab = You cannot have a PPF (yr post office) a/c and not make any contribution. The minimum annual contribution in an a/c used to be Rs 100/- few years back. Not sure if it has been revised. Non payment of contribution would render non-operative. The procedure for making it operative is simple but entails small penalty. If you do not contribute in your post office account, at some stage you would have to once again make it operative through small contribution plus a penalty. By that time if you have opened your SBI account, you would end up contributing into two accounts and find yourself on the wrong side of the law.
I see that your intention is not be unlawful but have convenience of a/c in SBI. To get an answer to your query for the procedure for transferring a post office account to SBI, I would advise you to write to the office for National Small Savings at Nagpur. I have written to them on couple of occasions by post during era when there were no emails and always got replies. These helped me when the concerned SBI staff were not very conversant with PPF rules and procedures. Summarising, staff at NSS are responsive and would help you out. Pl refrain from opening second account unless you do not mind being unlawful. Trust this will help you.

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ARUN BATRA January 20, 2013 at 10:29 am

Arnab = You can lodge your official complaint with http://www.nsiindia.gov.in/nsiIndex.asp

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santhosh April 12, 2013 at 3:53 pm

Dear Sir,
As I understood that opening 2 ppf accounts in one name is against law, can I my wife open a ppf account in the same SBI branch. ?
End of the day she as an individual can have a ppf account… at the same time as a family it is one investment.
Pls advice.

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Manshu April 14, 2013 at 7:35 pm

Yes, your wife can open a PPF account in the same branch. That’s allowed.

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ARUN BATRA April 14, 2013 at 9:00 pm

Yes, you can open second account in your wife’s name. But you should be very clear about the objective/s. If she is earning and tax payee, she will get the tax rebate. Otherwise, your total investment upto Rs 1,00,000 made in one/ both accounts will qualify for tax rebate. The second account is of not going to be any use from economic considerations.

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ARUN BATRA April 15, 2013 at 1:38 pm

I see certain persons have interest in operating more than one PPF account. There is word of caution for such persons. Kindly be careful while making your PPF deposit by transfer, your deposit may be accompanied by narration “Transfer from ” . Likewise, your savings bank account may state “Transfer to PPF account – . If you are making deposit in your wife names, your name will show up in her PPF account and your savings account. It can create problem for you if your total deposits in more than one account happen to exceed Rs 1.0 lakhs.

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umesh kadu April 29, 2013 at 12:41 am

myself opening two ppf account.what can I do .there is closing facility?i want 2 close my newer ppf account.

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ARUN BATRA April 29, 2013 at 8:58 am

Very difficult question! I am not sure if rule book has answer to your question. Never the less, put your question on website (http://www.nsiindia.gov.in/nsiIndex.asp) of National Savings Institute. I hope they will answer

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Sushil June 28, 2013 at 12:14 pm

I have two kids and I have a ppf account in each of their names. I had detailed discussion with both ICICI and SBI personnel and they have assured me that the ceiling of 100000 is for one account and i can separately deposit 100000 in each of the account. The account for minor actually belongs to the minor and once he/she is 18 years of age, guardian would not have any rights.
They also explained to me that the benefit i would get be only for 100000.
I can also confirm that i have received interest on both the account.
I can also confirm that i have given my PAN number as guardian on both the accounts.
I have tried writing to the PPF authority and have had no luck.
Considering all of the above, I can only keep my fingers crossed that whatever the bank personnel told me is correct and my kids would not lose the interest on their savings.
Thank you

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ARUN BATRA June 29, 2013 at 10:28 am

I have gone through the rules once again and can convey that an individual can deposit total of Rs 1,00,000 only in a year – his own account and that of his minor children included. This rule was not there in original Act passed by the Parliament in 1968. It was inserted through Ministry of Finance notification dated 6-Dec-2000. This can be verified using link http://www.nsiindia.gov.in/pdfs/Chapter2-PPF-1968.pdf. Should you have any question, you can write to National Savings Institute using their website http://www.nsiindia.gov.in/. If they do not reply you can lodge a complaint against NSIon the website http://www.pgportal.gov.in. My experience has been that Government system has improved a lot. It works and is responsive.

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krishna May 3, 2014 at 9:12 pm

I have opened two PPF account in my name one from SBI & other from POST OFFICE..in the year 2006 till now continue…Sir my question is it legal or illegal ..Can I close one account if yes how can i close it..??????????

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Biju M August 1, 2014 at 7:51 am

Sir, I have opened a PPF account in ICICI with 18K, which they are debiting from my SB account as 1500rs/month. Is it possible i can open one more PPF with SBI or Post Office and deposit 20K per annum. Awaiting your response. Thank you

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ARUN BATRA August 2, 2014 at 12:14 pm

Dear Biju = This forum has explicitly concluded that it is illegal to have more than one PPF account. I believe you cannot expect this forum to guide you on opening second account. You can instead increase/ decrease your contribution in your existing account per your requirement. If you have given standing instruction to your bank, pl change it suitably.

Reply

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