Government of India vide reference No.203/2006 dated 28.07.2006 has notified the scheme “Bank Term Deposit Scheme-2006” effective from 01.04.2006, which was announced in the recent Finance Budget. For unique identity, we have named the deposit scheme as “SIB-TAX GAIN –2006 ".
The salient features of the scheme are given below:
1. An investment up to Rs.1.50 lac (Minimum Rs.100/- and maximum Rs.1.50 lac in multiples of Rs.100/-) deposited in the bank as Fixed / under Compound interest scheme for a period of 5 years under SIB Tax Gain Deposit is eligible to be treated as exemption from Income Tax under Section 80C of IT Act, 1961.
2. Amount deposited in the name of individual, joint (first name holder) or HUF (Karta) not exceeding Rs.1.50 lac in a financial year is eligible for tax exemption.
3. Though nomination can be registered, NO nomination shall be made in respect of a term deposit applied for and held by or on behalf of a minor.
4. The rate of interest will be the rate of interest applicable for Fixed deposits with maturity 5 years. Additional rate for senior citizens will be applicable to this deposit also.
5. Deposit can be transferred from branch to branch but not between banks.
6. This deposit shall not be encashed before the expiry of 5 years from the date of its receipt.
7. Interest on this deposit shall be liable to Income Tax on the basis of annual accrual or receipt depending up on the simple interest or compound interest scheme and tax on such interest shall be deducted as usual.
8. The deposit shall not be pledged to secure loan or as security mentioned as per the Term deposit scheme, 2006, issued by the Central Government of India
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