5 Year Post office Time Deposit eligible for 80C

Investment made in "five year time deposit in an
account under Post Office Time Deposit Rules, 1981"
will be eligible for deduction from the Gross total
income, under section 80C, with the overall section
treshold of 1 Lakh.The additional point to be noted is
"The amendment shall apply to investments, as above,
made during the financial year 2007-08 and
subsequent years."Below is the summary of the
Finance bill presented in the budget:
Enlargement of the scope of eligible saving
instruments under section 80CSection 80C of the
Income-tax Act providesfor a deduction of upto rupees
one lakh to an individual or a Hindu undivided
family (HUF) for,-
(i) making investments in certain saving instruments;
or
(ii) incurring expenditure on tuition fee and
repayment of housing loan.With a view to encourage
small savings, it is proposed to enlarge the scope of
eligible saving instruments by inserting two new
clauses in sub-section
(2) of section 80C.
The following investments made by the assessee,
during the previous year, shall beeligible for
deduction under section 80C within the overall ceiling
of rupees one lakh:-
(i) five year time deposit in an account under Post
Office Time Deposit Rules, 1981; and
(ii) deposit in an account under the Senior Citizens
Savings Scheme Rules, 2004.Further, it is also
proposed to provide that where any amount is
withdrawn by the assessee from such account before
the expiry of a period of 5 years from the date of its
deposit, the amount so withdrawn shall be deemed to
be income of the assessee of the previous year in
which the amount is withdrawn.
The amount so withdrawn, accordingly, shall be liable
to tax in the assessment year relevant to
suchprevious year. The amount liable to tax shall also
include that part of the amount withdrawn which
represents interestaccrued on the deposit. However if
any partof the amount so received or withdrawn
(including the amount relating to interest) has
suffered taxation in any of the earlier years, such
amount shall not be taxed again.