Types of accounts
The scheme provides for two types of accounts viz.
- Account A which is in the form of "Savings Deposits".
- Account B which is in the nature of "Term Deposits".
Any person / firm / association of persons / company / HUF etc. intending to avail of the benefits under Section 54, 54B, 54D, 54F and 54G of the Income Tax Act, 1961 (43 of 1961) may open above mentioned accounts.
Joint accounts cannot be opened in the above scheme.
Minimum Deposit of Amount
Minimum Amount Rs.1000/- and in multiples of Rs.100/-.
Maximum Deposit of Amount
No upper limit.
Period of Deposit
Minimum : 12 Months
Maximum : 120 Months
According to the provisions of Section 54 (F) of Income Tax Act,1961 w.e.f. 1.4.1988, an assessee earning long term capital gains on sale of any asset who desires to utilize the net consideration for purchase of residential house within two years (2 years) from the date of sale of the capital asset is exempt from tax on the capital gains provided he deposits the sales consideration in authorized branches of Banks authorized to receive deposits and maintain accounts. The amount deposited in the account is permitted for withdrawal for the purpose of purchase of house for self-residence of the depositor, within two years of receipt of sales consideration. If the amount is not utilized within a period of two years, the long term capital gain on sale of the capital asset shall be subject to tax in the year in which the long term capital gains were earned. For withdrawing money from this account after the period of -2- years is over without purchasing house for self-residence, the permission of Income Tax department is necessary.
Rate of Interest
As per the maturity period of the deposit.
No additional interest is paid to senior citizen.
9. Individual depositor (not being a minor) can make nominations in favour of one or more persons, but not exceeding three, to receive the amounts standing to his credit in Account A or Account B in the event of his death before the amount has become payable, or if payable, but not paid.
The deposit will not be auto-renewed.
Method of calculation of interest on or before maturity
“In all cases of domestic term deposits (Period of deposit less than a year) where the terminal quarter is incomplete, interest should be calculated for complete quarter and for the actual number of days, reckoning the year 365/366 days, i.e. the calculation of interest on such deposits should be in order of completed quarters and days.”
Closure of the account
A depositor desirous of closing his account(s) shall apply on Form G duly approved by the assessing officer, who has jurisdiction over the depositor along with the relative pass book and/or deposit receipts.
In respect of a deposit account where a nomination is in force, the nominee may on the death of the depositor, apply for closure of the account in Form H duly approved by the assessing officer, who has jurisdiction over the deceased depositor along with the relative pass book and/or deposit receipt.
Other terms and conditions
The amount standing to the credit of the depositor in this account cannot be charged as security for loans/ guarantees or alienated in any manner, whatsoever