Suppose I gift one of my two houses to my wife as gift, I know the income will be clubbed with my income as per the Income-tax law. Is it same for wealth tax law also?

- Amarnath Sen

According to the prevailing wealth tax provisions, any transfer made to one’s wife for inadequate consideration or otherwise than in connection with an agreement to live apart, shall be deemed to be an asset of the transferor.

Therefore, wealth tax on the house gifted to your wife will be chargeable in your hands as the house gifted will deemed to be owned by you.

I had opened 2 PPF accounts in a post office -- one in my individual capacity, second for my HUF. These 2 cases have different addresses and PAN numbers. I had been depositing my yearly contributions to both these accounts until 2012. What should I do with the balance lying in the HUF account which will cross 15-year period in November 2013? Can I seek extension for another 5 years or do I have to withdraw it? Will I get interest on the withdrawal?

- Kamal Laddha

According to the provisions contained in Public Provident Fund (PPF) Scheme, 1968, (Scheme) PPF accounts could be opened by individuals and Hindu Undivided Family (HUF). However, with effect from May 13, 2005, opening of PPF accounts have been restricted to individuals only. In this regard, a clarification was issued by Finance Ministry allowing the current PPF accounts of HUF to continue till maturity and deposits/withdrawals in/from these accounts would be allowed to be made in accordance with the rules of the Scheme. In December 2010, the Ministry of Finance amended the scheme to insert the clause that any PPF account opened on behalf of a HUF prior to May 13, 2005 shall be closed after expiry of 15 years from the end of the year in which the initial subscription was made and no extension to existing HUF accounts shall be allowed. On maturity, the entire amount standing at the credit of the PPF account of HUF shall be refunded, after making adjustments, if any, in respect of any interest due from the subscriber on loans taken by him.

Hence, on completion of 15 years, your PPF account opened in HUF capacity will have to be closed and the amount to your credit shall be refunded to you as per the provisions of the scheme. Further, interest shall be paid on the deposits till the date of maturity of the account.

(The author is a practising chartered accountant)

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