Who is liable to pay tax on income from fixed deposits where there are joint holders?
Second one -
If me and my grandfather are joint holders of a fixed deposit where my grandfather is the first holder, the interest is transferred quarterly to my grandfathers savings account. And my grandfather gives me gift out of those interest income which I deposits in my separate de-mat account out of which I do on-line trading.
So in such case whether such transfer and income arising from my share trading will be treated as clubbing u/s 60 in the hands of my grandfather?
16 February 2012
First one answer.. Joint holders are liable to pay tax on interest on FD but generally Banks deduct tax from interest and issues TDS certificate in the name of person whose name has written first in FD account.
Second one answer.. As gift given by relative(Relative as per expl. to sec.56) is not taxable in the hands of reciever. Between grandfather and his son's son.. The question of clubbing does't arise..
Querist :
Anonymous
Querist :
Anonymous
(Querist)
16 February 2012
Thankx a lot Nagesh for your reply.
Clarification regarding first one-
So is it necessary for the joint holder to include the interest income in his tax file, or is it fine if the first holder include the entire interest income in in his taxable income?
Clarification regarding second one-
Regarding Sec. 56 I was also pretty sure that it will not attract tax. But regarding Sec. 60 will it be treated as transfer of income without transfer of assets (as interest of FD is transferred as gift to me out of which I am investing in stock market and arising income out of it) ?
16 February 2012
Section 60 is applicable if the following conditions are satisfied: The taxpayer owns an asset The ownership of asset is not transferred by him. The income from the asset is transferred to any person under a settlement, or agreement. If the above conditions are satisfied, the income from the asset would be taxable in the hands of the transferor. So interest is taxable in the hands of grandfather. Please note that accretion to income will not be clubbed.
16 February 2012
about first one.. TDS certificate is in the name of first holder. it is necessary to include interest income in taxable income so you ll get the benefit of tax deducted.