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Income related

01 June 2017

Dear Valued Members,

Mr. X having a bank FDR with monthly payout mode in his name, he made a standing instruction of monthly interest payment to an savings a/c where Mr. X is 2nd holder and Mrs. Y is 1st holder.

Now the query is the interest earned from FDR will be income of Mr. X or Mrs. Y

Interest from SB A/c earned towards deposit of FDR interest will be income of Mr. X or Mrs. Y

Please guide. Advance Thanks for your valuable reply.

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (183191 Points)
Replied 01 June 2017

1. Mrs. Y

2. Mr. X, if he is first holder of SB acc.

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PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1448 Points)
Replied 01 June 2017

1) When interest generate in FD:-

As the FD interest is generating with the name of Mr. X so the FD interest is taxable in the hands of Mr. X.

TDS can be deducted in the name of Mr. X. as well as 15G/15H can be submitted in the name of Mr. X.

2) When interest credited in SB A/c.

2) After generating the interest amount, this amount is credited in the account of Mr. Y. So in this case it will be treated as like gift income of Y from Mr. X. This income is taxable in the hands of Mr. Y.

But if the relation of Mr. X and Mr. Y is fall under the defination of relative so in that case Mr. Y's income is exempted as per section 56(2)(vii)..

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13809 Points)
Replied 01 June 2017

So far as FD interest is concerned it is taxable in the hands of the person in whose FDR is made. And for interest of SB account it will be taxable in the hands of first joint holder. The FDR income will accrue only to the person who holds the FDR it does not change hands merely because of the fact that its interest was transferred to a savings account in which FDR holder is the second joint owner.