Govt notifies bank term deposit scheme for HUF

New Delhi, July 31 (UNI) The Government today notified the Bank Term Deposit Scheme, 2006 allowing an individual or a Hindu undivided family (HUF) to invest in the term deposit of a scheduled bank up to Rs one lakh in a year, subject to the overall ceiling of Rs 1 lakh for the purposes of tax benefit under section 80C.

Under the Bank Term Deposit Scheme, 2006, notified today, for the purposes of section 80C (2)(xxi) of the Income-tax Act, a term deposit in a scheduled bank by an individual or a Hindu undivided family of up to Rs one lakh in a year along with investments in other saving schemes, will be subject to the overall ceiling of Rs 1 lakh for the purposes of tax benefit under section 80C.

According to an official release here, the term deposit may be of two types, that is, single holder or joint holder type deposit. In the case of joint holder type deposit, the tax benefit under section 80C will be available only to the first holder of the deposit.

The maturity period of the term deposit shall be five years. No term deposit can be encashed before the expiry of five years from the date of investment. The rate of interest on the term deposit shall be in accordance with the rate fixed by the scheduled bank from time to time.

Interest on the term deposit shall be liable to tax either on accrual or on receipt basis, depending upon the method of accounting followed by the investor.

UNI SD RL KN2014