My father is a senior citizen(67).He is a retired employee of a bank.His income includes, monthly pension and interest on fixed deposits with bank.Every year he invests in tax saving deposits in order to keep his income below taxation limit,(Rs.3 lacs). He also submit 15H form regularly every year. And thus, he files his income tax return with 'nil tax' liability every year.
Recently, he came to know that he was nominated for some fixed deposits of Rs.3.5 lacs of his maternal aunt. His maternal aunt was died,4 years before, without any legal heirs.
Q1. if he accepts the deposits proceeds along with the accumulated interest on it what will be the tax consequences to him?
Q2. is this income taxable to him or tax free ?
Q3. which documents, he should keep ready, in case of a notice from the Income Tax Department?
Q4. how to show these deposit proceeds in his income tax return?
Q5. which investment should he make to avail any income tax deduction for these deposits proceeds?
1. None for the net proceeds till the acceptance date.
2. As on the date of acceptance, tax free......... interest taxable thereafter.
3. Nomination details and death certificate of his uncle; alongwith bank communications if any.
4. Exempted income
5. Tax free bonds (though other options also to be evaluated)
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