Investment in Bank Deposits Eligible for Tax Benefits
Section 80C provides for tax deduction in respect of sum invested in a term deposit of a Scheduled bank provided such term deposit is issued in terms of Bank Term Deposit Scheme, 2006.
1. Who can invest
An individual or a HUF can invest in the term deposit issued under the Bank Term Deposit Scheme, 2006
2. Period of investment
Investment can be made in the term deposit with a scheduled bank for a fixed period of not less than five years.
Scheduled bank means the State Bank of India constituted under the State Bank of India Act, 1955, or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934.
3. Amount of investment
(i) Minimum
The amount to be invested in the term deposit of a scheduled bank shall be a minimum of one hundred rupees or multiples thereof.
(ii) Maximum
An assessee can invest in the term deposit of a scheduled bank any amount not exceeding one lakh rupees in a year.
4. Types of deposit
(i) Term deposit shall be of following types, namely --