Exemption of interest on savings certificates under clause (15)(ii) – Interest on holdings in the names of wife and minor children whether eligible for exemption – Exemption in the event of death of one of the joint holders

1. A question has arisen as to whether in the event of death of one of the joint holders of the 12-Year National Plan Savings Certificates, exemption under section 10(15)( ii) would be admissible only in respect of the maximum amount admissible to an individual holder singly or the exemption as available to the joint holders will continue to be available to the surviving joint holder.

2. According to the proviso to section 13 of the Post Office Savings Certificates Rules, 1960, “a holding shall not be considered in excess of the limit prescribed in these rules, if it is due to any of the following reasons, namely :

a. inheritance;

b. award by the Government for meritorious service;

c. survivorship in the case of joint holdings;

d. statutory devolution; and

e. nomination.”

3. It has been decided that under section 10(15)(ii ) of the Income-tax Act, 1961, read with the proviso (c ) to section 13 of the Post Office Savings Certificates Rules, 1960, in the event of death of a joint holder of the certificates, the surviving joint holder would continue to get exemption from tax on the interest received up to the maximum amount permitted to be held in the case of joint holdings.  Following are the various investments in Small Savings Certificates and Accounts covered by the provisions of section 10(15)(ii) along with the limits of investments singly and jointly by the holders of these certificates/accounts :

Nature of investments
Limits up to which investments can be made singly
Limits up to which investments can be made jointly
Rs.
Rs.
1.
National Savings Certificates II & III Issues combined
50,000
1,00,000
2.
Post Office Savings Bank Accounts
25,000
50,000
3.
Cumulative Time Deposit Accounts
90,000
1,80,000

The old certificates, covered under section 10(15)( ii), are as under :

1. TSDCs and DDCs.

2. PO Cash Certificates.

3. 12-Year National Plan Savings Certificates.

4. 12-Year National Defence Certificates.

5. 10-Year National Plan Certificates.

The limits for these certificates are inclusive of the limits for National Savings Certificates II and III Issues.

4. Board’s Circular No. 10(XLVII-9)-D, dated 20-5-1958 [Clarification 2], may be treated as modified to the extent specified above.

Circular : No. 102 [F. No. 167/56/71-IT(A-I)], dated 3-2-1973.

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Category : Income Tax (25906)
Type : Circulars (7600) Notifications/Circulars (30846)

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