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Tax Planner - Fixed Deposit and Abhyudaya Cash Certificate

KBL Tax Planner

The Schemes provide dual benefits of high returns and tax exemption under Section 80(C) of the Income Tax Act 1961.Under this scheme, an assessee can invest in the term deposit any amount not exceeding 1.5 lakh rupees in a year. This scheme is available in both Fixed Deposit and Abhudaya Cash Certificate Schemes.

The schemes are governed by the Bank Term Deposit Scheme, 2006 notified by the Central Government. Therefore, power to relax in the scheme and its operation is vested with the Central Government.

Deposit Amount:

  • The minimum amount is ₹100 or in multiples thereof and the maximum amount is ₹1.5 lakhs in a financial year.

Types of Term Deposit:

  • a) Single holder type
  • b) Joint holder type
  • The single holder type of deposit shall be issued to an individual for himself or in the capacity of the Karta of the Hindu Undivided Family.
  • The Joint holder type deposit receipt may be issued jointly to two adults or jointly to an adult and minor, and payable to either of the holder or to the survivor.
  • 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.

Receipt:

  • Deposit Receipts for fresh/renewal of Term Deposits will be generally issued on the same day.
  • Deposit holder should be present at the branch and should sign on the face of the original term deposit receipt in the presence of bank officials.

Period of investment:

  • Fixed period of 5 years only

Pledging of Term Deposit:

  • The term deposit shall not be pledged to secure loan or as security to any other asset.

Premature Payment:

  • No Term Deposit shall be encased before expiry of the five years from the date of its receipt.

Payment of interest:

  • KBL Tax Planner – FD : The interest be paid every quarter or every month. In the case of payment of monthly interest, interest should be paid at discounted rate as applicable to domestic Fixed Deposit Scheme.
  • KBL Tax Planner – ACC: The interest will be payable at the time of maturity and interest will be compounded at quarterly rest.

Income Tax:

  • Interest on these term deposits will 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.
  • The tax on such interest should be deducted in accordance with the provisions of section 194A or section 195 of the Act.

Nomination

  • Nomination facility is available. However no nomination can be made in case of deposits held in the name of a minor represented by a guardian.
  • In the event of death of the holder of a term deposit in respect of which nomination is in force, the nominee will be entitled before or after the maturity of the term deposit to encash the term deposit. The nominee should make an application to the Bank supported by proof of death of the holder.

PAN Card and Aadhaar Card:

  • Permanent Account Number (PAN) and Aadhaar number is mandatory while opening such Term Deposit.

Extending Tax Planner Deposit Schemes to NRI Customer under NRO Status:

  • KBL-Tax Planner and KBL-Tax Planner ACC can also be extended to NRI customers under NRO status provided the customer elects not to be governed by the provision of Chapter XII-A of the Income Tax Act, 1961.

Rate of interest: