This question is only on savings accounts in banks: Q1: What is the tax status of second holder of bank account in "Either or survivor" or "Former or Survivor" mode? Does he pay tax on the money? Q2: What about ownership of money in case first holder dies without a will? Does the second holder of bank account in "Either or Survivor" or "Former or Survivor" mode become the full, final, legal owner of the money?
Q1) If the second holder is also earning Income, then the second holder's share will be taxable in his/her hands. Otherwise, first holder is usually liable for tax if he/she is the sole income earner.
Q2) Yes. In such a case, second holder becomes the sole owner of the money. However, in the absence of a will, all the legal heirs may claim their share
1. In Joint Accounts - The tax liability depends on the income. If the income pertains of first holder then he need to pay tax on the same and if the deposit/income pertains to second holder he will pay tax. If there is some income wherein for ex. any amount received on sale of property which is owned by both the holders then the gain will be distributed among both equally or as share decided by holders.
2. In case of death of one of the holder then the amount in the Bank will be given to legal heir of first holder jointly with Second holder. It depends on the Banker and the nomination provided by the holders at the time of opening the Account
Dear Sir,
1. Determining the tax liability is very simple. Person who has earned the money will be liable to pay tax.
2. I would refrain answering this question, as it is purely a legal question and not tax related question and i dont have relevant expertise to answer this. However, in my opinion, nominee in the bank account will get the entire money.
Please feel free to call/ revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
Hello Sir,
1. Yes, the second holder may pay tax on the interest earned is by him and also if the money deposited is out of his income.
2. It normally goes to the nominee if any, if the banks books or else to the legal heirs of the deceased.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
