Interest earned on Capital Gains Scheme Term Deposit with Bank

Dear Sirs,

I advised my friend to park the proceeds from sale of residential property in Capital Gains Term Deposit with Canara Bank, until further course of action ( to buy another residential property or to invest in 54EC bonds of REC ).

 

Accepting my suggestion, he approached Canara Bank and sought to place the funds in a 2 year Capital Gains Scheme Fixed Deposit, with interest payment frequency being quarterly.

My firend specifically requested the Bank to credit the quarterly interest to his normal Savings Bank Account but the Bank refused to accept his request;  they stated that the interset credit will go ONLY to the Capital Gains Scheme SB account and not to the normal SB account.

 

Which practically means he can not utilise the interest earned on the Term Deposit as he pleases. 

 

On the contrary, the annual interest paid by REC, etc on 54EC Exemption bonds are automatically credited to the depositor's normal SB account, which means he is free to use the amount for any purpose.

 

Is Canara Bank correct in refusing the request to credit interest to normal SB account?

Kindly clafiry, Sirs,......

 

Replies (2)
Quick Summary
A user is seeking clarification regarding Canara Bank's policy on crediting interest earned from a Capital Gains Term Deposit. The bank reportedly insists that interest can only be credited to a dedicated Capital Gains Scheme SB account, not the customer's regular savings account. This contrasts with 54EC bonds, where interest is typically paid to the depositor's normal account, allowing for flexible use. The user questions the bank's refusal and seeks confirmation on its correctness.

No he cannot use the accretion to the funds from funds invested in Infrastructure capital bonds.

Sir, he has NOT invested in Infrastructure Fund u/s 54 EC. He has only parked the proceeds temporarily with Canara Bank under the Bank's Capital Gains Term Deposit Scheme. The bank is refusing to permit the depositor / assessee to utilise the interest earned on this Capital Gains Term Deposit.

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