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TAX FORUM: QUESTIONS & ANSWERS
Premature withdrawal of NSC certificates
I am an income-tax assessee and assessed in Income-tax Office, Salem I(4). During the assessment for assessment year 2002-03, I had deposited Rs. 20,000 NSC Scheme for claiming for rebate under Sec. 80C of the Income-tax Act. The deposit is made on March 30, 2002 and matures for repayment on March 31, 2008. Now I am laid up for a chronic ailment and hospitalised and I have to pay hospital bill and for purchase of medicines, etc. I am not having enough money from my other sources and I have to withdraw the amount of this NSC deposit. Please help me to refer some section or, rule, or notification under the Income-tax Act, under which I can withdraw the amount prematurely. I am a senior citizen aged 81 years. To get a loan from banks on security of this deposit, is a very cumbersome procedure and to furnish many forms, indemnity bond, etc. I am unable to do these. Please advise me in this matter.
Premature encashment is permitted under Sec. 16(1) only on the following three contingencies: “(a) on the death of the holder or any of the holders in the case of joint holders; (b) on forfeiture by a pledgee being a Gazetted Government Officer when the pledge is in conformity with these rules; or (c) when ordered by a court of law.”
It can, however, be pledged with a bank under Rule 12 on an application to the Post-Master in the prescribed form to transfer the certificates as security to any of the parties listed here: (a) the President of India or Governor of a State in his official capacity; (b) the Reserve Bank of India or a scheduled bank or a co-operative society including a co-operative bank; (c) a corporation or a Government company; (d) a local authority; and
(e) a housing finance company approved by the National Housing Bank and notified by the Central Government.
If one cannot wait till maturity, the only course is to borrow from a bank by pledging the certificates under the above Rules.
The certificates can be got re-transferred on discharge of the pledge obligation.
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