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2) Will there be any tax deduction if the matured FD amount is transferred to the bank and not withdrawn?
3) Will there be a tax deduction if the whole amount (approx 12 to 13 lakh) is withdrawn from the bank?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is deducted at the bank, then does the bank also charge any tax for the maturity amount deposited in the bank and not withdrawn?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then does the post office bank/savings bank also charge any tax for the maturity amount deposited in the bank and not withdrawn?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).