New Delhi: The Government says interest on bank term deposits of up to Rs 1 lakh will be exempt from tax within the overall 80 C limit, but the interest should be on deposits with a 5-year tenure.
No premature encashment is permitted on such deposits. The Government also says that interest would be taxable on receipt or accrual basis.
If the account is jointly held, the tax benefit will be available to the first holder of the deposit.
The finance ministry has also said that trusts claiming income tax exemption would need to do so under form 10 BB.
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