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How Does Joint FD Taxation Work for Married Couples?

Tax Expert - Answered on Mar 24, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by Minal on Dec 14, 2024Hindi

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Let us assume Mr A does a fixed deposit of Rs 50,000,00 in year 2022-25. He earns Rs 8,50,000 as interest on it. Now, on maturity of this FD, if Mr A deposits the same 50 lakhs as further FD and the interest amount Rs 7.25 lakhs (after tax deductions) as another FD in his wife's name, on whom will be the income tax liability and how much ?

Ans: 01. Mr.A would be liable for tax payment on Rs.8.50 (L) interest earned on FDR of Rs.50.00 (L) during the period 2022-23, 2023-24 & 2024-25. The Interest shall be declared & tax paid for each year under reference.
02. When Mr.A deposits the amount in FDR in favour of his wife, Interest earned on it shall be clubbed with the Income of her husband u/s 64 if I.T.Act.
Most welcome for any further clarifications. Thanks.

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Question by Vipin - Sep 06, 2022Hindi

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I would be grateful if you could provide some clarifications for the given queries: 1) What will be the implications, if the primary holder aged 76 years, encashes the matured FDs? 2) Will there be any tax deduction if the matured FD amount is transferred to the bank and not withdrawn? 3) Will there be a tax deduction if the whole amount (approx 12 to 13 lakh) is withdrawn from the bank? 4) What is the cash withdrawal limit in a year without getting any tax liability? 5) Once the TDS/TCS on the Fixed Deposit is deducted at the bank, then does the bank also charge any tax for the maturity amount deposited in the bank and not withdrawn? 6) Once the TDS/TCS on the Term Deposit is deducted at the post office, then does the post office bank/savings bank also charge any tax for the maturity amount deposited in the bank and not withdrawn?

Ans: Tax is always on the income portion. So in your case, interest income will be taxable on accrual system or cash system (as chosen by you for such Income).

Usually taxpayers offer income on accrual system as per Interest Certificate issued by the bank (irrespective of the fact that interest amount will be credited to bank on maturity).

If you choose not to renew FD, the amount will be credited to your savings account and on that balance also you will earn interest as per rate of interest for savings account. Savings Interest Income is also taxable above Rs 50,000 for senior citizens.

Interest Income is taxable irrespective of the fact you withdraw amount from bank account and bank will deduct TDS on interest in deposit (not on savings interest).

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