Income Of Deceased Father
This query is : Resolved
08 September 2016
What is the tax treatment when I Receive mature proceeds of the fixed deposit Put by my father in his name but He was no more and Me in the capacity of Nominee received the said amount..Is the said amount taxable in my hands..???
08 September 2016
Dear thiyagarajan,
which type of fixed deposit is it?? tax saving, FD or?
Message likes :
1 times
08 September 2016
Dear Sir,
It is not a Tax saver deposit...its a normal cumulative deposit..
08 September 2016
Dear Thiyagarajan
FD amount recieved to the nominee is not taxable.
Hope your query is resolved
08 September 2016
Thank U sir...
And What will be the situation if the same is Tax Saver Deposit..?
31 July 2024
When you receive the proceeds of a fixed deposit (FD) as a nominee after the depositor's death, the tax treatment depends on several factors including the nature of the FD and the type of income it represents. Here’s a detailed explanation:
### **1. Tax Treatment of Fixed Deposit Proceeds Received by a Nominee**
#### **a. General Fixed Deposits:**
- **Nature of Income:**
- The interest earned on a fixed deposit is considered **income from other sources** and is taxable in the hands of the depositor (your deceased father) during his lifetime.
- **Proceeds Received by Nominee:**
- **Maturity Amount:** The maturity amount of the fixed deposit received by you as a nominee is generally not taxable in your hands. The maturity amount is typically treated as a transfer of capital rather than income.
- **Interest Income:** If the FD was not matured before your father’s death, any interest income accrued up to the date of death would need to be reported in the final return of your deceased father. This is part of the income earned before death and should be included in the income tax return filed by the legal heirs or representatives.
#### **b. Tax Saver Deposit:**
- **Tax Saver Fixed Deposit (under Section 80C):**
- **Eligibility for Deduction:** Contributions to a Tax Saver FD qualify for tax deduction under Section 80C of the Income Tax Act. This deduction is available to the depositor while filing their tax return.
- **Proceeds Received by Nominee:**
- **Maturity Amount:** The amount received by the nominee on maturity is not subject to further tax in your hands as it is a return of capital. The principal amount is not taxable.
- **Interest Income:** The interest earned on the Tax Saver FD is taxable as income in the hands of the deceased, and any accrued interest up to the date of death must be included in the final return of the deceased. If any interest is earned posthumously, it is considered income in the final year of the deceased.
### **2. Key Points to Note:**
- **Final Tax Return of Deceased:**
- The deceased’s final tax return must include any interest earned up to the date of death. The legal heirs or representatives are responsible for filing this return.
- **Nominee’s Role:**
- As a nominee, you are only receiving the proceeds and do not have additional tax liabilities related to the maturity amount itself. Your tax obligations are limited to ensuring proper reporting of any accrued interest if required.
- **Document Requirements:**
- Ensure to keep proper documentation, including the FD certificate and any communication from the bank regarding the maturity proceeds, for future reference in case of any queries from tax authorities.
### **Summary:**
1. **Maturity Proceeds of Fixed Deposit:**
- The maturity amount received by a nominee is not taxable in your hands.
- Interest accrued up to the date of death should be reported in the final return of the deceased.
2. **Tax Saver Deposit:**
- The maturity amount is not taxable in your hands.
- Interest income earned up to the date of death should be reported in the deceased’s final return.
In summary, you as a nominee will not be taxed on the maturity amount received from the fixed deposit. However, ensure that any accrued interest up to the date of death is properly reported in the final return of the deceased.
### **1. Tax Treatment of Fixed Deposit Proceeds Received by a Nominee**
#### **a. General Fixed Deposits:**
- **Nature of Income:**
- The interest earned on a fixed deposit is considered **income from other sources** and is taxable in the hands of the depositor (your deceased father) during his lifetime.
- **Proceeds Received by Nominee:**
- **Maturity Amount:** The maturity amount of the fixed deposit received by you as a nominee is generally not taxable in your hands. The maturity amount is typically treated as a transfer of capital rather than income.
- **Interest Income:** If the FD was not matured before your father’s death, any interest income accrued up to the date of death would need to be reported in the final return of your deceased father. This is part of the income earned before death and should be included in the income tax return filed by the legal heirs or representatives.
#### **b. Tax Saver Deposit:**
- **Tax Saver Fixed Deposit (under Section 80C):**
- **Eligibility for Deduction:** Contributions to a Tax Saver FD qualify for tax deduction under Section 80C of the Income Tax Act. This deduction is available to the depositor while filing their tax return.
- **Proceeds Received by Nominee:**
- **Maturity Amount:** The amount received by the nominee on maturity is not subject to further tax in your hands as it is a return of capital. The principal amount is not taxable.
- **Interest Income:** The interest earned on the Tax Saver FD is taxable as income in the hands of the deceased, and any accrued interest up to the date of death must be included in the final return of the deceased. If any interest is earned posthumously, it is considered income in the final year of the deceased.
### **2. Key Points to Note:**
- **Final Tax Return of Deceased:**
- The deceased’s final tax return must include any interest earned up to the date of death. The legal heirs or representatives are responsible for filing this return.
- **Nominee’s Role:**
- As a nominee, you are only receiving the proceeds and do not have additional tax liabilities related to the maturity amount itself. Your tax obligations are limited to ensuring proper reporting of any accrued interest if required.
- **Document Requirements:**
- Ensure to keep proper documentation, including the FD certificate and any communication from the bank regarding the maturity proceeds, for future reference in case of any queries from tax authorities.
### **Summary:**
1. **Maturity Proceeds of Fixed Deposit:**
- The maturity amount received by a nominee is not taxable in your hands.
- Interest accrued up to the date of death should be reported in the final return of the deceased.
2. **Tax Saver Deposit:**
- The maturity amount is not taxable in your hands.
- Interest income earned up to the date of death should be reported in the deceased’s final return.
In summary, you as a nominee will not be taxed on the maturity amount received from the fixed deposit. However, ensure that any accrued interest up to the date of death is properly reported in the final return of the deceased.
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