S.O. 2906(E).In exercise of the powers conferred by clause (xxi) of sub?section (2) of section 80C of the Income?tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendments to the Bank Term Deposit Scheme, 2006, namely:?
- (a) This scheme is called as the Bank Term Deposit scheme 2014.
(b) In the Official Gazette on the date of its publication it shall come into force.
- In the para 3, in clause (1), of the Bank Term Deposit Scheme, 2006, for the words “One Lakh Rupees”, the words “one hundred and fifty thousand rupees” shall be substituted.
[Notification No. 63/2014, F.No.142/09/2014?TPL]
Note: In the Gazette of India the principal scheme was published, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 1220(E) dated the 28th July 2006 and subsequently amended by notification number S.O. 2127(E), dated 13th December 2007.
The Feature of the scheme is given below:
- The scheme is meant for Hindu and individuals undivided families for deposit in a scheduled bank up to a maximum limit of Rs. 1 lakh.
- For the deposit this deduction is subject to the overall ceiling of Rs. 1.5 lakh along with other deduction already available under Sec. 80C.
- Joint deposits are also permitted, but the eligibility for deduction will be only to the first holder.
- It is further clarified that the maturity period is five years, with the money being locked up for this period without right to encasement prior to the date of maturity.
- By the scheduled bank from time to time interest on the term deposit fixed. So that there is a variation between banks and at different points of time at the prevailing rate on the date of acceptance of such deposit.
- The interest income is not tax exempt, it is further made clear.
- On receipt basis or accrual basis the interest is taxable according to the regular method of accounting followed by the investor-assessee.
- If the interest income exceeds Rs. 10,000 then at source Tax is required to be deducted.
- If the investor has no liability to tax, by filing a self declaration in form 15G or 15H, deduction of tax at source is avoided, as the case may be.
- Not merely to the public sector banks, but also to the all scheduled bank the scheme is open.
- Either in his individual capacity or as the karta of HUF and individual can hold the deposit. Under the income tax law HUF and individuals are two different persons; it follows that the ceiling of Rs. 1 lakh should be separately applicable.
- The nomination facility is also permissible, during the term of deposit at any time with right to the nomination made available, but before maturity.
- By a minor, deposit is not prohibited, but in such cases there will be no right of nominations.
- With an adult minor can be a joint-holder.
- Under the scheme the deposit has to be in the prescribed from with the fixed deposit receipt bearing Permanent account Number (PAN) and along with the address, name and other particulars, signature of the assessee may be required by the bank.
- The deposit inter-branch transfer is possible.
- Under rule 9 of the scheme there is a specific bar against to secure loans a pledge of the deposit or as security t have it accepted.
- In the scheme the power to relax the operations of any of the provisions has been reserved. By the Central Government under Clause 16 of the scheme to the extent that with the provisions of the Income tax Act such relaxation is not inconsistent.