PPF Act need to be amended to increase Investment Limit to Rs. 100000/-

Keeping in view that the Income-tax Act, 1961 was amended by the Finance Act, 2005 permitting an individual to deposit to the maximum of Rs. 1,00,000/- in any of the specified schemes, the concerned authorities should take steps to amend clause 3 of the PPF Scheme in terms of section 80C of the Income-tax Act.

Decided By: HIGH COURT OF KARNATAKA , In The Case of : M. S. Padmarajaiah v. Secretary, Department of Finance, Govt of Karnataka, Case No.: W. P. No. 297 of 2006 (GM),  Dated : September 1, 2008

RELEVANT EXTRACTS :

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2. The brief facts leading to the filing of this writ petition are as under:

The petitioner who is a Senior Advocate of the Bar, holding a PPF Account No. 0154 (one of the specified Savings under section 80-C of Income-tax Act) with the 6^th respondent. Section 80-C of the Income-tax Act was amended by the Finance Act, 2005 increasing the permissible deduction from Rs. 70,000/ to Rs. 1,00,000/- for the financial year 2005-06 (commencing from 1-4-2005 to 31-3-2006). During the financial year 2005-06 the petitioner had deposited a sum of Rs. 40,000/- in his PPF Account. Later on, he sent a cheque for Rs. 40,000/ – by way of second instalment towards PPF. But, the said 6^th defendant refused to accept the second instalment of Rs. 40,000/- on the ground that the total deposit exceed Rs. 70,000/- in a year. Hence the petitioner sent another cheque for a sum of Rs. 1,00,000/- in his PPF A/c., as per Finance Act, 2005, but in vain. The reply received by the petitioner from the respondents 5^th, 3^rd and 2^nd are at Annexures – K, L and M. respectively. IT is contended that the respondents 1 to 5 have no authority to reply as per the impugned communication contrary to the Income-tax Act. therefore, the petitioner is before this Court praying for the reliefs as mentioned above.

6. The first prayer of the petitioner is for quashing the communications dated 9-11-2005, 27-7-2005 and 15-11-2005 at Annexures-K, L and M. But those letters have issued in terms of the existing PPF Scheme. Therefore, there is no good ground for quashing those communications. Keep­ing in view that the Income Tax Act. 1961 was amended by the Finance Act of 2005 permitting an individual to deposit to the maximum of Rs. 1.00,000/-, in any of the specified schemes, the concerned authori­ties should have taken steps to amend para­graph 3 of the PPF Scheme 1968 as amended earlier by increasing the subscription limit from Rs. 20.000/- to Rs. 30.000/ w.e.f. 2-3-79: from Rs. 30.000/- to Rs. 40,000/-w.e.f- 16-3-83: from Rs. 40.000/- to Rs. 60,000/- w.e.f. 23-6-86; and from Rs. 60,000/- to Rs. 70.000/- w.e.f. 15-11 2002 as and when section 80 of the I. T. Act was amended. The authorities should have amended paragraph 3 of the PPF Scheme, 1968 as per the Finance Act. 2005. In the facts and circumstances of the case, it would meet the ends of justice to direct the respon­dent Nos. 3 and 4 to take steps to amend clause 3 of the PPF Scheme, 1968 in terms of Section 80C of the I. T. Act.