Query on fixed deposits and gift tax

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GAURAV

21 Points Posted on 18 March 2013

Hi,

I have the following query on the income tax calculations.

1. For an Fixed Deposit which is going to mature in the month of Feb 2013 or March 2013. In case, the fixed deposit is not withdrawn or surrendered or not taken out but is extended or renewed, in such a case do the person needs to pay income tax on the interest ( calculated on a pro-rata basis till March 2013) or the interest will be calculated when the person will take out the entire amount of the deposit.

2. What is the minimum amount of which a person can give to his wife for which the wife need not to pay the tax. For example, if one pays tax on his salary and then transfer some amount to wife's account. What is the minimum amount one can transfer to wife & kids accounts.

Replies (2)

Dhawal Mohnot

Practicing

567 Points Posted on 18 March 2013

In my view.

For the 1st query it will depend on the accounting system which the individual follows, if he adopts accrual system then interest has to be accounted and tax paid on it, if cash system is followed then the interest wil be accounted on receipt of the interest and tax has to be remitted at that time.

A person can gift any amount to wife and kids, there is no restriction.

Mihir

Wealth Manager

5358 Points Posted on 18 March 2013

It depends on the type of FD. Most FD will credit your account with the interest accruued for the specified period and a certificate of interest is issued. If the FD interest is accrued in the FY 2012/13, then the interest accrued for the period before march 31, will be taxable and needs to be shown in your IT returns. Check with the bank regarding the certificate of interest for the FY 2012/13.

You can transfer some money to your wife's account and children's account.