I have an unmarried sister and she don’t have her own income. I would like to open a PPF in the name of sister for her old age expenses and deposit 1.5Lakh every year. I will not be claiming any tax benefit for the money deposited in my sister’s PPF account. Me and my wife have our own PPF accounts. My questions are :
1. Can I deposit 1.5L in my sisters PPF account and 15 year later use the money for her old age care?
2. Does she need to file tax returns for 1.5L deposited in her name every year?
- Yes, you can deposit the money from your account.
- It is from your earning. So you have to gift her. For her, it is not taxable income as the gift is within a family. Also, if she can invest that money in PPF, then at maturity also, it is tax-free. However, for record keeping purpose, it is always advisable to have simple Gift deed (even in plain paper). This for her safety when IT Dept questions her in future for the source of this investment.
As it is her only income from you which is again less than the minimum tax slab, I don’t think it is necessary for her to file IT return.
Thank you very much. Me and My sister highly appreciate your help.