People use various investment options to save for the future. In India, Fixed Deposit (FD) and National Savings Certificate (NSC) are considered popular savings options. Along with both these savings options, there is also a tax benefit. Under Section 80C of the Income Tax Act, citizens can claim tax deduction up to Rs 1.50 lakh by investing in tax saving FD and NSC and reduce the tax burden slightly.
Both the tax saver FD and NSC have a lock-in period of 5 years, which is also called the maturity period. That is, you cannot redeem these two savings before the completion of 5 years. But in some exceptional circumstances, premature withdrawal / closure of these two saving instruments is allowed. Let’s know what are those extraordinary circumstances…
Tax Saver FD
The tax saver FD is 5 years old. In some banks, only 5-year FD is called tax-saving FD, while some banks have a separate tax-saver FD. According to the State Bank of India (SBI), Punjab National Bank (PNB), though the tax saver FD cannot be broken before maturity but after the death of the depositor, the nominee / legal heir, the deposit is deposited before the maturity period. Or later, can be withdrawn at any time. In such a case the FD remained in the bank for the duration, the bank will pay interest as per the interest rate applicable for that period and no penalty will be charged.
According to SBI, on the death of the first accountholder in the joint account, the second account holder can break the tax saver FD before the maturity period is completed.
NSC is a post office product. At present, 6.8% interest rate is applicable on NSC. It can be closed only in these exceptional circumstances before the completion of the 5-year maturity period.
– In case of single account on death of single account holder
– On the death of any or all the account holders in the joint account
– Forfeited by a gazetted officer on a pledge.
– Upon order by the court.