Bank Tax Saving Deposit Scheme under section 80C Written by CMA Samir Biswal

Bank Tax Saving Deposit Scheme

This scheme was notified by Central Government vide Notification No. 203/2006 dated 28th July 2006. This is the only deposit scheme available with banks where tax benefits under section 80C of Income Tax, Act are available to depositors. The deposit is made for a period of five years and no loan is available against security of this deposit.

Salient features of Bank Term Deposit Scheme (BTDS)

Item	Description
Eligibility	Only individuals and HUFs (Hindu Undivided Families) are eligible. The deposits can be issued in single holder or joint holder types.
Minimum amount	Rs. 100/-
Maximum amount	In multiples of Rs. 100/- not exceeding Rs. 1,00,000/- in a year.
Maturity period	5 years
Interest	Interest rate varies from bank to bank. The interest may be paid either in lump sum at the time of maturity or it may be paid every quarter or every month.
Nomination facility	Available, except in cases where deposits are made or held in the name of minors.
Transferability	Allowed from one branch of the issuing bank to another.
Premature Encashment	Not allowed, except in the event of the death of the first holder of the deposit in a case of a joint holder type deposit, the other holder of the deposit shall be entitled to encash the term deposit before its maturity by making an application to the branch manager of the bank, supported by proof of death of the first holder of the deposit. (Amendment by Notification No.289/2007 dated 13-12-2007)
Tax benefits	Available under Section 80C
Interest Taxability	Taxable, Tax is deductible at source.
Other features	The single holder type deposit receipt is issued to an individual for himself or in the capacity of the Karta of the Hindu undivided family. The joint holder type deposit receipt is issued jointly to two adults or jointly to an adult and a minor, and is payable to either of the holders or to the survivor. In case of deposit receipts issued in joint names, the deduction from income under section 80C is available only to the first holder of the deposit. No loan is available against pledge of these deposits. Permanent Account Number (PAN) is required at the time of issue of these deposits. If a term deposit receipt is lost, stolen, destroyed, mutilated or defaced, the person entitled thereto may apply for the issue of a duplicate receipt to the branch of the scheduled bank from where the receipt was issued. In the event of the death of the holder of a term deposit in respect of which a nomination is in force, the nominee or nominees shall be entitled at any time before or after the maturity of the term deposit to encash the term deposit. If a holder of a term deposit dies and there is no nomination in force at the time of his death, the branch manager of the branch of bank from where the term deposit was issued, shall pay the sum due to the deceased, to his legal heirs.