11 September 2014
Can any body reply to my following query please?
The amount was kept in Fixed Deposit for 6 years. Interest was to be paid on maturity. Deposit was in the name of minor but at the time of maturity he has become major. No TDS was deducted from the payment made on maturity alongwith interest. What will be the tax liability in the subject case and who is responsible to pay the tax.
11 September 2014
The taxability of interest depends on the system of accounting followed - Cash or Mercantile. In cash system it will be taxable when the actual interest is received in cash - i.e. in hands of minor who has become major.
In accrual system of accounting - interest will be accrued to minor and clubbed u/s 64(1A) till the time minor becomes major.
CAclubindia
