Taxability of interest accrued on fd received by minor

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2016 The assesse and her minor daughter received compensation as FD on 15.4.2015 as per Court order under Motor Accident claim on death of assesse husband. On daughter's FD, the interest is payable only after the minor attains majority . Now the question is whether the interest to minor will be clubbed in mother's income on accrual basis. If not, are there any case laws supporting our claim of non taxability. Bank is deducting TDS on interest paid on accrual basis.

Unnikrishnan B

Unnikrishnan B (Expert)

20 September 2016 As per income tax act the income if minor is taxable in the hands of parent whose income is more .but there is a exemption of Rs1500 per child.
In your case I will suggest you .
You can meet the MACT people and tell the situation and get a letter from MACT to open the FD in the joint name of you and the child .1st name should be the name of mother.then you can give 15G to the banker so that banker will not deduct tds in your case .
In the case if MACT deposits banker will only act at the direction of the tribunal.you cannot
Tell the banker anything about it.kindly discuss the natter with MACT and let the MACT provide a letter to the banker.

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2016 Fd is in individual name of minor and mother separatly. There is no problem in it. The question is whether accrued interest on fd which is payable to the minor after she become major should be clubbed in the mother's income this year or there is any provision under which interest can be exempted to mother on minor fd (fd is capital receipt hence exempt).

Unnikrishnan B

Unnikrishnan B (Expert)

20 September 2016 In your case what you can do is you can submit certificate for no deduction of tax issued by jurisdictional assessing officer in your area.then bank will not deduct tax at source
I hope it is clear

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2016 My question is whether accrued interest is taxable or not in the mother's hands up to the age of her daughter becoming major.

Unnikrishnan B

Unnikrishnan B (Expert)

20 September 2016 Taxable.Hope it is clear

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2016 Clear sir. Thank you very much.

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