Friends,
Income tax department has issued a notification regarding Bank FDR limit under Section 80C which could be read as under :
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,
PART–II, SECTION 3, SUB‐SECTION (ii)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
(CENTRAL BOARD OF DIRECT TAXES)
Notification
New Delhi, the 13th November, 2014.
(INCOME‐TAX)
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 the Bank Term Deposit Scheme, 2006, namely:‐
1. (1) This scheme may be called the Bank Term Deposit (Amendment) Scheme, 2014.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Bank Term Deposit Scheme, 2006, in para 3, in clause (1), 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]
(Raman Chopra)
Director (TPL‐II)
Note: The principal Scheme was published in the Gazette of India, 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 are given below:-
- The scheme is meant for individuals and Hindu Undivided Families (HUFs) for deposit in a scheduled bank up to a maximum limit of Rs. 1 lakh(Now 1.5 lakh as notified above).
- This deduction for the deposit is subject to the over-all ceiling of Rs. 1.5 lakh along with other deductions 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 encashment prior to the date of maturity.
- Interest on the term deposit is fixed by the scheduled bank from time to time, so that there is likely to be variation as between banks and at different points of time at the prevailing rate on the date of acceptance of such deposit.
- It is further made clear that the interest income is not tax exempt.
- Interest is taxable on accrual basis or receipt basis according to the regular method of accounting followed by the investor-assessee.
- Tax is required to be deducted at source, if the interest income exceeds Rs. 10,000.(read more about tds here)
- Deduction of tax at source is avoided by filing a self-declaration in Form 15G or 15H, as the case may be, if the investor has no liability to tax.
- The scheme is open not merely to public sector banks, but also to all scheduled banks.
- An individual can hold deposit either in his individual capacity or as the karta of HUF. Since individuals and HUF are two different persons under the income-tax law, it follows that the ceiling of Rs.1 lakh should be separately applicable.
- The nomination facility is also permissible, with right to such nomination made available at any time during the term of the deposit, but before maturity.
- Deposit by a minor is not prohibited, but there will be no right of nomination in such cases.
- Minor can be a joint-holder with an adult.
- The deposit under the scheme has to be in the prescribed form with the fixed deposit receipt bearing Permanent Account Number (PAN) and signature of the assessee along with the name and address and other particulars as may be required by the bank.
- Inter-branch transfer of the deposit is possible.
- There is a specific bar under Rule 9 of the scheme against a pledge of the deposit to secure loans or to have it accepted as security.
- The power to relax the operations of any of the provisions in the scheme has been reserved by the Central Government under Clause 16 of the scheme to the extent that such relaxation is not inconsistent with the provisions of the Income-tax Act.
