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13. Amendment of section 80C. |
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In section 80C of the Income-tax Act,
(a) in sub-section (2), after clause (xxii), the following clauses shall be inserted, namely:
"(xxiii) in an account under the Senior Citizens Savings Scheme Rules, 2004;
(xxiv) as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.";
(b) after sub-section (6), the following sub-section shall be inserted, namely:
"(6A) If any amount, including interest accrued thereon, is withdrawn by the assessee from his account referred to in clause (xxiii) or clause (xxiv) of sub-section (2), before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year:
Provided that the amount liable to tax shall not include the following amounts, namely:
(i) any amount of interest, relating to deposits referred to in clause (xxiii) or clause (xxiv) of sub-section (2), which has been included in the total income of the assessee of the previous year or years preceding such previous year; and
(ii) any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.".
Clause 13 seeks to amend section 80C of the Income-tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. This section provides for a deduction of up to rupees one lakh to an individual or a Hindu undivided family for making investment in certain saving instruments or for incurring expenditure on tuition fee and repayment of housing loan.
It is proposed to insert new clauses (xxiii) and (xxiv) in sub-section (2) of said section to enlarge the scope of eligible savings instruments, so as to provide that any sum paid or deposited in the previous year by the assessee in an account under the Senior Citizens Savings Scheme Rules, 2004 or as five year time deposit in an account under the Post Office Time Deposit Rules, 1981 shall also be eligible for tax benefits.
Further, a new sub-section (6A) is also proposed to be inserted so as to provide that where any amount, including the interest accrued thereon, is withdrawn by the assessee from such accounts before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year. However, if such amount is received by the nominee or legal heir of the assessee on the death of such assessee, the amount so received by such nominee or legal heir, as the case may be, shall not be liable to tax. However, the interest including in such amount which has not been included in the total income of the assessee in any of the earlier year, shall be liable to tax. Further, if the interest included in such amount has been taken into consideration for computing the total income of the assessee for the previous year or years preceding the previous year in which the amount is withdrawn, such interest shall not be liable to tax again.
These amendments will take effect from 1st April, 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years.
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