Premature closure of Tax Saving FD on the death of Fixed Deposit holders. Know the rules & eligibility follows by the banks i.e. SBI, Canara, BoB, BoI, PNB etc and other private banks in India. In general the Premature closure or the part withdrawal before the lock of period 5 years is not allowed, however, it is allowed in case of death of the depositor. The Tax Saving FD can be closed before the maturity of term deposit in case of death of the first account holder.
The levy of penalty would be exempted and nominee/legal heir will be allowed premature payment even before the lock-in-period as per rules.
Payment to Nominee/Legal Heirs
If a fixed deposit holder of fixed deposit dies and there is no nomination in force at the time of his death, the bank from where the term deposit was issued, shall pay the sum due to the deceased, to his legal heirs as per rules. The closure proceeding will be done at home branch only.
Also Read – Can HUF Continue After Death of Karta ?
Who are Eligible to Open tax Saving Fixed Deposit ?
Individuals, including illiterate, blind persons, Hindu Undivided family (HUF) and joint account. The joint holder deposit receipt may be issued jointly to two adults or jointly to an adult and a minor, and payable to either of the holders or to the survivor. However, in the case of joint holder deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit.