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
Circular No. 102 was issued by the Central Board of Direct Taxes on 3 February 1973. Its subject is 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.
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Protects the surviving joint holder of savings certificates. The question was whether, on the death of one joint holder of the 12-Year National Plan Savings Certificates, exemption under section 10(15)(ii) is limited to the maximum an individual may hold singly, or continues at the joint limit. The proviso to section 13 of the Post Office Savings Certificates Rules, 1960 says a holding is not to be treated as exceeding the prescribed limit where the excess is due to inheritance, a Government award for meritorious service, survivorship in a joint holding, statutory devolution or nomination. Reading section 10(15)(ii) with clause (c) of that proviso, the Board decides that the surviving joint holder continues to get exemption on the interest up to the maximum permitted for joint holdings. It sets out the limits then in force: National Savings Certificates II and III Issues combined, Rs. 50,000 singly and Rs. 1,00,000 jointly; Post Office Savings Bank accounts, Rs. 25,000 and Rs. 50,000; and cumulative time deposit accounts, Rs. 90,000 and Rs. 1,80,000, with the older certificates it lists counting within the National Savings Certificates limits. Circular No. 10(XLVII-9)-D dated 20 May 1958 is modified to that extent.
A question had arisen on what happens to the exemption when one of two joint holders of savings certificates dies.
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.
In an assessment where interest on certificates held by a survivor is taxed above the single-holder limit.
Source: the Income Tax Department’s own published text — its page for this instrument.