Wednesday, March 23, 2016
5 Year Post office Time Deposit eligible for 80C
Investment made in "five year time deposit in an account under Post Office Time Deposit Rules, 1981" will be eligible for deduction from the Gross total income, under section 80C, with the overall section threshold of 1 Lakh.
The additional point to be noted is "The amendment shall apply to investments, as above, made during the financial year 2007-08 and subsequent years."
Below is the summary of the Finance bill presented in the budget:
Enlargement of the scope of eligible saving instruments under section 80C
Section 80C of the Income-tax Act provides for a deduction of upto rupees one lakh to an individual or a Hindu undivided family (HUF) for,-
(i) making investments in certain saving instruments; or
(ii) incurring expenditure on tuition fee and repayment of housing loan.
With a view to encourage small savings, it is proposed to enlarge the scope of eligible saving instruments by inserting two new clauses in sub-section (2) of section 80C. The following investments made by the assessee, during the previous year, shall be eligible for deduction under section 80C within the overall ceiling of rupees one lakh:-
(i) five year time deposit in an account under Post Office Time Deposit Rules, 1981; and
(ii) deposit in an account under the Senior Citizens Savings Scheme Rules, 2004.