• inheritance of fixed deposits

My grand mother and I have fixed deposits worth 20 lakhs with banks.She is th first holder and I am second holder ,they are in any one or survivor mode. They mature in december of 2017 and march of 2018.My grand mother passed away at the age of 84years in jan 2013. When i asked to liquidate those fds bankers said to wait till maturity.Banks used to cut TDS on these deposits and she was not a tax payer.I am a tax payer, so please suggest me how to pay taxes once i liquidate those  fixed deposits on the time of maturity ,as i was the second holder.Do i have to pay the taxes for the previous years on those FDs as she didnt pay taxes,but she didnt come under tax liability when she was alive.please answer me in detail
Asked 1 year ago in Income Tax from Hyderabad, Telangana

In ordinary course, the survivor becomes the single holder when the joint holder expires. Thus in your case, you should have become the sole depositor upon expiry of your grand mother. If the bank converted the joint account into single account as is required to be done, the PAN would have been yours when tax is deducted at source on interest credit. So pl. check if the PAN is yours in 26AS in the TDS certificate.

The interest income becomes your income after the death of your mother. If the interest is payable on maturity, you can offer them as income in the year of maturity and claim TDS in respect of such income, though deducted in the earlier years.

B Vijaya Kumar
CA, Hyderabad
865 Answers
61 Consultations

5.0 on 5.0

Dear Taxpayer,

Interest earned in the FD after the death of your grandmother would be taxable in your hands.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

Hello,

You should have informed the bank about her death so that they would have started deducting TDS in your name instead of hers. You can now ask the bankers to revise the TDS Returns (which I hope they will) and then show the Interest income as your income while filing your returns or if already filed then even you may have to revise the same.

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

Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

You can provide your PAN number and at maturity declare the interest on the FD in your tax returns. The principle is exempted.

The Interest if not declared can be shown at the time of maturity.

Another option in your case is that you declare the interest accrued from the date of her death till the date of maturity in your tax returns and need not declare the income accrued to her till her death. You can say that the income accrued till her death was not taxable in her hand as the same was below taxable.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
107 Consultations

5.0 on 5.0

Hi,

Interest on FD is taxable.

After your grand mother passed away. your were the first holder of the security and liable to pay taxes on interest earned. if the deposit is huge, there must be deduction of TDS amount from the interest earned on FD's. and it should be reflected in 26AS of the first holder.

I would suggest , declare the interest income on FD while filing the return this financial year 2016-17.

The FD which have been matured. you need to show under income from other sources.

deduct from the maturity amount the amount invested in it. the balance is the interest amount which is taxable. and to be showed as bank interest on time deposit.

Vishakha Agarwal
CA, Bangalore
448 Answers
64 Consultations

5.0 on 5.0

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