Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

F16a recd. in the name of minor-can this tds be .....

bujjulu (e-TDS + IT return filer Hyderabad) (729 Points)

28 June 2013

AGainst a Fixed Deposit in the name of minor Form 16A is received.

Minor's income is added to the Guardian / Parent / Father's income (is n't it)

Now as the income derived from the Fixed Deposit is added to .........Can the TDS deducted against this FD be taken credit by the Guardian ? Parent / Father.....

Professionals please clarify with enough provisions. (not mere personal opinion)

Reply
Follow
Share

5 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 28 June 2013

Originally posted by : bujjulu
	AGainst a Fixed Deposit in the name of minor Form 16A is received. Minor's income is added to the Guardian / Parent / Father's income (is n't it) Now as the income derived from the Fixed Deposit is added to .........Can the TDS deducted against this FD be taken credit by the Guardian ? Parent / Father..... Professionals please clarify with enough provisions. (not mere personal opinion)

Parent can file a declaration with the bank at the beginning of the year, containing parent's Name, Address, PAN and reasons for giving credit to such person (in this case stating that the children’s income will be taxable in parent's hand). The bank will have to take notice of this declaration and show that tax has been deducted from parent's income. Parent should, therefore, be able to claim credit for such TDS on children’s investments.

Refer Rule 37BA of the Income Tax Act 1961. For your reference, I am pasting the same below.

37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
.
2)(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee :
.
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).
.
(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
.
(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.

Upgrade to CAclubindia Pro. Subscribe Now!

bujjulu (e-TDS + IT return filer Hyderabad) (729 Points)
Replied 28 June 2013

Thanks for a clear answer. keep it up.

CA Vinay parmar (Chartered Accountant) (1318 Points)
Replied 28 June 2013

Further in your case you can avoid TDS by submitting form 15G to bank at the begining of the year for non deduction of Tax. refer below web page for more clearity.

https://www.charteredclub.com/tds-on-fixed-deposits/

bujjulu (e-TDS + IT return filer Hyderabad) (729 Points)
Replied 29 June 2013

When the Parent has taxable income - (and when the minor's income has to be added to ) Is it correct / fair to submit form 15G.

(Then one more doubt that arises is If the Parent / Guardian happens to be a 60+ then which form he should submit 15G/H. (these forms through never submitted to the dept. by the banks and the dept. neverscrutinizes that are submitted - to solve / answerthis ?s professionals has to burn their brains)