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Should minor's contribution be included for limit for PPF?
A continuation of the answer to a question on public provident fund that appeared in these columns on February 14.
The undertaking reads as under:
"(iv) I also declare that I shall adhere to the ceiling on deposits as provided for by the Central Government from time to time, which is Rs. 60,000 in a financial year at present together in an individual self-account and account(s) on behalf of minor(s) of whom I am the guardian/ a HUF account/ an association account. In case, at any time the said declaration is found untrue/false, no interest shall be payable to me/ the subscriber on the amount of deposits found in excess of the prescribed limit".
While referring to the individual account, the declaration reads that the declarant will not exceed the limit of Rs. 60,000 "together in an individual self-account and account(s) on behalf of the minor(s) of whom I am the guardian" before disjunctively referring to HUF and association. The revised form is therefore clear that the undertaking is to admit the ceiling as an aggregate of all deposits made by the individual in his own and the account/s of minor(s) for whom he is the guardian.
The earlier form which has been superseded required only a declaration in following words: "I hereby declare that I am not maintaining any other PPF account except an account on behalf of a minor or a HUF, association of persons". This earlier declaration also only rules out two accounts for the same subscriber. Both old and new forms indicate that there is a separate application for each separate account for individual and minor. Either parent can open the account as guardian. Each account holder is treated as a subscriber in the Act, the scheme and even the procedure. Every payment is made by a challan which is expected to give the name of subscriber and account number, so that each account holder is recognised as a `subscriber'. The definition of `subscriber' in Sec. 2(d) of the Public Provident Fund Act, 1968 (PPF Act), as pointed out by the reader, Abhay Baheti of Chennai, reads as under:
"(d) `Subscriber' means an individual who makes subscription to the Fund under Sec. 4 and where such subscription is made by an individual on behalf of a minor, of whom he is guardian, such minor".
It is, therefore, unambiguously clear that even where the subscription is made by the individual as guardian of the minor, it is `such minor', who is the subscriber.
Sec. 4 of the PPF Act referring to subscription to the Fund reads as under:
"4. Subscription to fund: - An individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Fund in such manner and subject to such maximum and minimum limits as may be specified in the scheme".
Clause 3 of the scheme even at the time of raising the limit framed in pursuance of the Act placing the limits on subscription reads as under:
"3.(1) 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. 100 and not more than Rs. 60,000 in a year".
Both the Act and the scheme clearly indicate each subscriber's account cannot fall below Rs. 100 nor exceed Rs. 60,000 in that year. The word used is `or' as between `on his behalf' and `on behalf of a minor'. Hence, there is no bar for separate ceiling as may be inferable on a plain understanding of the provisions.
The Ministry of Finance (DEA) letter No. F3(5)-PD 186 dated May 19, 1987 has issued the following clarification in consultation with the Ministry of Law as to treatment of minor's account on death of guardian in following words:
"(i) In the case of an account opened on behalf of a minor, the minor is treated as subscriber. The amount in the account of a minor does not become payable on the death of the guardian, because under Sec. 8 of the PPF Act the amount becomes payable only on death of the subscriber.
In case of death of guardian the account of minor remains operative and a new account need not be opened. The surviving natural guardian or a guardian appointed by competent court may continue the account of minor after producing necessary guardianship certificate.
(ii) In the event of death of the minor subscriber the guardian does not ipso facto becomes entitled to the payment of the balance. The balance in such cases is payable to the legal heirs of the minor in accordance with Sec. 8 of Public Provident Fund Act and para 12(6)(ii) of the Public Provident Fund Scheme" (emphasis supplied).
These clarifications recognise the legal position that each subscriber's account is distinct.
Clause-8 of the scheme provides that interest will be credited on the lowest balance during the month between 6th day and end of the month to the account indicating that there is no provision for denial of interest, where there is excess credit.
It is only the clarification issued by the Director General (Post & Telegraph) NO.1-23/75-SB dated November 15, 1979, which reads as under:
"(5) If contribution in excess of Rs. 60,000 are made during the year by the subscriber, the deposit in excess of Rs. 60,000 will not carry any interest nor this excess amount will be eligible for rebate under Sec. 88 of the Income-tax Act. The excess amount will be refunded by the accounts officer to the subscriber without any interest".
But even the above clarification understands the limit as applicable to the account of each subscriber. Only where there is excess in the same account, the question of any non-payment of interest on such excess can arise, but where it is not refunded as provided in the rule, can such interest be denied? Can a clarification override the scheme itself, when there was no provision for denial of interest in excess contribution, which is not expected to be accepted. None of the clarifications issued by the Post and Telegraphs Department or the Notifications thus far refer to any collective limit.
A summary of the scheme as published on Page 23 of the booklet (third edition) published by A. N. Dureja, Asst. Director General (Retd.) as P.O.S.S. Part One-A corrected up to January 1, 1998 consisting of Public Provident Fund and the Scheme to meet the demand for separate book by banks as stated in the preface, reads as under:
S. Rajaratnam
(To be concluded)
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