28.  Tax Planning @ Public Provident Fund (PPF)

Certain deductions are allowed under the Income Tax Act, while computing taxable income. One such important deduction relates to contributions made to the Public Provident Fund (PPF).


An individual can make a subscription (or contribution) to the PPF, either on his own behalf or on behalf of a minor, of whom he is the guardian. Similarly, subscription to the PPF can also be made by a Hindu Undivided Family in the name of any of its members. A PPF account can be opened by a subscriber with any office or branch of the State Bank of India and any other office known as Accounts Office authorised by the Central Government to receive subscriptions under the PPF Scheme 1968. The minimum subscription that can be made to the PPF account in one year is
` 500, and the maximum amount is ` 1,00,000. This upper limit of investment up to ` 1,00,000 in one financial year is inclusive of investment for the minor child. The minimum duration of a PPF account is 15 years.

It can be renewed for a further block of 5 years thereafter, by submitting Form H. Every individual desirous of subscribing to the PPF has to apply in Form A. A Pass Book is issued to every subscriber. The details of the deposits, withdrawals, loans and payment thereof, together with interest due, are entered in the Pass Book. Subsequent subscriptions to the PPF account are to be deposited with a challan in Form B. The subscriptions for any year paid into the PPF account, have to be in one lump sum or in no more than 12 instalments in a financial year. A subscriber can apply for transfer of his account from one Accounts Office to another Accounts Office, if he so likes. The subscription can be made in cash, by a crossed cheque, draft or postal order in favour of the Accounts Office, at the place at which that office is situated.

 

Interest is allowed at a rate notified by the Central Government, in the official gazette, from time to time. At present, the rate of interest is 8.8% p.a. It is calculated for each calendar month on the lowest balance at credit of the PPF account between the close of the fifth day and the end of the month and is credited to the account at the end of each year. Such interest is completely exempt from income tax under the provisions of Section 10(11) of the Income Tax Act. It may be mentioned here that the amount standing to the credit of any subscriber in the PPF account is not liable to attachment under any decree or order of any court for any debt or liability incurred by the subscriber. No new HUF can now open a PPF account.


The subscriptions to the PPF account along with L.I.P., 5-year bank fixed deposits, N.S.C. VIII issue, etc., get tax deduction under Section 80C upto a maximum of
` 1 lakh.


A taxpayer can liberally withdraw money from the PPF account as per the provisions of the PPF Scheme, 1968. However, no such withdrawal is permitted for the first five years. It is only after the expiry of five years, from the end of the financial year in which the initial subscription was made, that a subscriber is permitted to withdraw some amount from the fund.
 
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
“Penalties” Under Income Tax Act. 1956
How is a Search Operation Conducted by Income Tax Department ?
Surveys for Checking Ostentatious Expenditure
Surveys for Enforcing Compliance with Provisions of TDS
“Summon” U/s 131 of Income Tax Act.
Investigation by Income Tax Department:
Appellate Authorities of Income Tax Department
Power to Call for Information U/s Sec. 133(6) of Income Tax Act.
Specific Surveys U/s 133A(1) of Income Tax Act.
Types Of Income Subject To TDS [Deduction Of Tax At Source]
Pre-Requisite For Claiming Income Tax Refund
Benefits of Filing Income Tax Returnsn
Section-139(9): Defective Tax Return
 
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How is a Search Operation Conducted by Income Tax Department ?
The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.
 
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
Scrutiny assessment refers to the examination of a return of income by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence..
 
“Penalties” Under Income Tax Act. 1956
Penalties by way of monetary payments are charged under the Income Tax Act for various defaults relating to payment of taxes, maintenance of accounts, for noncompliance and non co-operation during proceedings, for evasion of tax, etc..
 
Income of Individuals And HUFs – As a Tax Payers Under Income Tax Act, 1961.
The individual tax payers and also the HUFs while proceeding to calculate the net taxable income in the first phase are required to arrive at the gross total income under different heads of income...
 
Types Of Income Subject To TDS [Deduction Of Tax At Source]
The following types of incomes are mainly subject to deduction of tax at source: (a) Salaries Section 192. (b) Interest on securities Section 193..
 
Pre-Requisite For Claiming Income Tax Refund
For claiming income tax refund the first prerequisite is that there should have been excess tax paid or deducted at source on the basis of return of income.
 
Section-139(1) : Provision for Voluntary Income Tax Return
Every person,— (a) being a company or a firm; (whether having income or loss) or (b) being a person other than a company or a firm if his total income or the total ncome of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall file a return of his income in the prescribed form.
 
Benefits of Filing Income Tax Returnsn
We have heard many a times that every individual whose total income exceeds the maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.
 
Section-139(9): Defective Tax Return
Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation.
 
Section 139(5) : Revised Income Tax Return
If any person, having furnished a return u/s 139(1), or in pursuance of a notice issued under section 142(1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time.
 
Section-139(4A) : Income Tax Return of Charitable and Religious Trusts
Every person in receipt of income derived from property held under trust or other legal obligation wholly or partly for charitable or religious purposes or of income being voluntary contributions referred to in section 2(24)(iia) shall.
 
Section-139(4) : Belated Income Tax Return
If an assessee has not furnished a return of his income within the time allowed to him under section 139(1) or within the time allowed under a notice issued under section 142(1).
 
 
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