In exercise of the powers
conferred by clause (xxi) of Sub-section (2) of Section 80C of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby makes the following
scheme, namely: (1) This scheme may be called the Bank Term Deposit Scheme, 2006. (2) It shall come into force on the date of its publication in the Official
Gazette. (1) In this scheme, unless the context otherwise requires, (a) "Act" means the Income-tax Act, 1961 (43 of 1961); (b) "assessee" means (i) an individual; or (ii) a Hindu undivided family; (c) "form" means a form as prescribed by the scheduled bank; (d) "investment" means an investment in the term deposit of a
scheduled bank by an assessee in accordance with this scheme; (e) "scheduled bank" means the State Bank of India constituted
under the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (3 8 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 (2 of 1934); (f) "term deposit" means a deposit with a scheduled bank for a
fixed period of not less than five years; (g) "year" means a year commencing on the 1st day of April. (2) Words and expressions used herein and not defined shall have the
meanings respectively, assigned to them in the Act. (1) An assessee can invest in the term deposit of a scheduled bank any
amount not exceeding [1][one
hundred and fifty thousand rupees] in a year. (2) The amount to be invested in the term deposit of a scheduled bank shall
be a minimum of one hundred rupees or multiples thereof. (1) Term deposit shall be of following types, namely: (a) Single holder type deposits; (b) Joint holder type deposits; (2) (a) The single holder type deposit receipt shall be issued to an
individual for himself or in the capacity of the Karta of the Hindu undivided
family; (b) The joint holder type
deposit receipt may be issued jointly to two adults or jointly to an adult and
a minor, and payable to either of the holders or to the survivor : Provided that in the case of
joint holder type deposit, the deduction from income under section 80C of the
Act shall be available only to the first holder of the deposit. (1) Subject to the provisions of paragraph 4, the single holder or the joint
holders of a term deposit may, by filling in necessary particulars in the
prescribed form at the time of making the term deposit, nominate any person
who, in the event of death of the single holder or both the joint holders, as
the case may be, shall become entitled to the deposit and to the payment due
thereon. If such nomination is not made at the time of making the term deposit,
it may be made by the single holder, the joint holders or the surviving joint
holder, as the case may be, at any time after the term deposit receipt is
issued, but before its maturity, by means of an application in the prescribed
form to the officer in charge of the branch of the bank from which the term
deposit receipt was issued. (2) "No nomination shall be made in respect of a term deposit applied
for and held by or oft behalf of a minor. An assesses desiring to invest
in term deposit, shall present at any branch of a scheduled bank, an
application in the prescribed form. (1) The bank shall issue a term deposit receipt to an assessee on receipt of
payment. (2) The term deposit receipt shall bear the name, address, Permanent Account
Number and signature of the assessee, along with any other particulars which
the scheduled bank may specify. (1) A term deposit may be transferred from one branch of the scheduled bank
from which it has been issued, to any other branch of the said bank, on the
assessee making an application, at either of the two branches : Provided that no term deposit
shall be transferred from one scheduled bank to another scheduled bank. (2) Every such application shall be signed by the holder of the term deposit
receipt: Provided that in the case of
joint holder type deposit, the application may be signed by one of the joint
holders if the other is dead. The term deposit shall not be
pledged to secure loan or as security to any other asset. (1) 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. (2) Every such application shall be accompanied by a statement showing
particulars, such as number, amount and date of the receipt, and the
circumstance attending such loss, theft, destruction, mutilation or defacement. (3) If the officer in charge of the bank is satisfied of the loss, theft,
destruction, mutilation or defacement of the certificate, he shall issue a
duplicate receipt on the applicant furnishing an indemnity bond in the
prescribed form with one or more approved sureties or with a bank guarantee : Provided that where the face
value or the aggregate face value of the certificate or certificates lost,
stolen, destroyed, mutilated or defaced is five hundred rupees or less, a
duplicate receipt or receipts may be issued on the applicant furnishing an
indemnity bond without any such surety or guarantee : Provided further that where
such application is made with respect to a receipt mutilated or defaced, of
whatever face value, a duplicate receipt may be issued without any such
indemnity bond, surety or guarantee, if the receipt mutilated or defaced is
surrendered and the receipt is capable of being identified as the one
originally issued. (4) A duplicate receipt issued under sub-paragraph (3) shall be treated as
equivalent to the original receipt for all the purposes of this scheme except
that it shall not be encashable at a branch of the bank other than the branch
at which such receipt is issued without previous verification. (1) The maturity period of a term deposit receipt of any denomination shall
be five years commencing from the date of the receipt. (2) No term deposit shall be encashed before the expiry of five years from
the date of its receipt. (1) The rate of interest on the term deposit shall be in accordance with the
rate fixed by the scheduled bank from time to time. (2) The interest may be paid either in lump sum at the time of maturity or
it may be paid every quarter or every month in accordance with the regulatory
guidelines for payment of interest on the term deposit. (3) Where the interest is paid by the scheduled bank in lump sum at the time
of maturity, the term deposit receipt shall bear the yearly rate of interest on
the term deposit. (1) 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 me term
deposit. (2) For the purpose of sub-paragraph (1), the surviving nominee or nominees
shall make an application to the branch manager of the bank, supported by proof
of death of the holder and of deceased nominee or nominees, if any. (3) If there are more nominees than one, all the nominees shall give a joint
discharge of the receipt at the time of receiving the payment. If a holder of a term deposit
dies and there is no nomination in force at the time of his death, 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. (1) Interest on these term deposits shall be liable to tax under the Act, on
the basis of annual accrual or receipt, depending upon the method of accounting
followed by the assessee. (2) The tax on such interest shall be deducted in accordance with the
provisions of section 194A or section 195 of the Act. Where the Central Government
is satisfied that the operation of any of the provisions of this scheme causes
undue hardship to the assessee, it may, by order, for reasons to be recorded in
writing, relax the requirements of that provision in a manner not inconsistent
with the provisions of the Act. [1]
Substituted by the Bank Term Deposit (Amendment) Scheme, 2014 vide Notification
No. 63/2014 dated 13.11.2014 for the following : - "one lakh rupees" The Bank
Term Deposit Scheme, 2006