There are so many tax saving schemes for individuals as per Indian Income Tax Act. Out of those schemes, Term Deposit Scheme is very attractive. To understand the term deposit scheme we would like to clarify the following points:-
Q. What is Bank Term Deposit Scheme?
Ans. Under this scheme fix deposit is made with schedule banks to save the income tax.
Q. Who can invest the money in to Bank Term Deposit Scheme?
Ans. Any Individual or Hindu Undivided Family (HUF) can invest money in to Bank Term Deposit Scheme with scheduled banks. Parents also can deposit money in name of their minors. An Account can be opened under this scheme in single name or in joint names or on either or survivor basis.
Q. What is the minimum amount to be invested in Bank Term Deposit Scheme?
Ans. Minimum sum of Rs.100/= can be invested in this scheme.
Q. What is the maximum amount to be invested under Bank Term Deposit Scheme?
Ans. There is no limit of maximum amount but under section 80C the deduction shall be allowed up to Rs.1, 50,000/= only.
Q. Is the facility of nomination is available under this scheme.
Ans. Yes, nomination facility is available on all term deposits except in case of minor.
Q. What is the maturity period of Bank Term Deposit?
Ans. The term Deposit shall mature on expiry of five years from the date of receipt.
Q. Can premature encashment of Bank Term Deposit Receipt be done?
Ans. No, premature encashment of Bank Term Deposit is permitted. However, in case of death of the first holder, the other joint holder may encash the deposit before its maturity.
Q. Can a Term Deposit Receipt be transferred from one branch to another branch?
Ans. Yes, a Term Deposit Receipt can be transferred from one branch to another branch of same bank. However, it can not be transferred from one bank to another bank.
Q. What is the tax benefit of investment in Bank Term Deposit Scheme?
Ans. Amount invested in Bank Term Deposit Scheme along with NSC/PPF/LIC/ULIP etc. is eligible for deduction under section 80-C up to a maximum amount of Rs.150000/= for financial year 2016-17 (Assessment year 2017-18)
Q. In case of Bank Term Deposit in joint names, who will take the advantage of Income Tax?
Ans. In case of deposit under joint names, deduction u/s 80-C shall be available to the first holder.
Q. Is interest received on Bank Term Deposit taxable?
Ans. Yes, The interest received on bank term deposit is taxable yearly on accrual basis
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