Income related

1. Mrs. Y

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

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)..

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.

Two things:

1. Relationship between X and Y

2. What's the source of the principal for FD? Funds were sourced from X or Y or both, and in what ratio?

Interest earned needs to be divided in that ratio and then taxed individually. Clubbing provisions may apply based on relationship.