Tds on fixed deposit
atul
(Querist) 18 April 2014
This query is : Resolved
SIR,MY WIFE IS A HOMEMAKER. SHE HAS FIXED DEPOSIT OF AROUND RS 500000/- ON WHICH SHE IS GETTING INTEREST MORE THAN 10000/- BUT HER TOTAL INCOME IS UNDER INCOME TAX SLAB.CAN SHE SUMIT FORM 15H IN THE BANK FOR AVOIDING TAX DEDUCTION.IS THERE ANY WAY OF AVOIDING TAX DEDUCTION??.THE FIXED DEPOSIT IS FROM HUSBAND EARNINGS.
Anirudh
(Expert) 18 April 2014
Where from she got that Rs. 5 lakhs through which she has made the Fixed Deposit?
Guest
(Expert) 18 April 2014
Please discuss, what is the actual problem when Form 15H has already been given and what do you want to ask?
Rajendra K Goyal
(Expert) 18 April 2014
When 15 H submitted bank must have not deducted the TDS. What is the query?
Anirudh
(Expert) 18 April 2014
Dear Mr. Rajendra,
Pl. read the query. He did not say that Form 15H has been submitted to the bank. Rather he wants to know whether Form 15H can be given by his wife to the Bank.
Rajendra K Goyal
(Expert) 19 April 2014
Anirudh ji,
Regards and thanks for pointing the mistake.
Very sorry for omission.
Form 15H be submitted, Bank would not deduct the TDS.
Anirudh
(Expert) 19 April 2014
Again simply giving 15H would not solve the problem. If the amount had been given by the husband then the interest earned on the FD by the wife would get clubbed in his hands. Now a days tracking of transactions is taking place in the I.T. Department. Therefore one has to be very careful and should not take things very lightly and try to do any thing (assuming to be a very good tax planning, which in fact not) without knowing the correct implication.
Dr J C Vashista
(Expert) 19 April 2014
Consult taxation practitioner, your wife is liable for payment of income tax
Anirudh
(Expert) 19 April 2014
Dear Dr. Vashista,
May I sincerely request you not to give directions like consult taxation practitioner etc. I feel, that whoever can answer the query can answer.
Yes, if you have counter some other answer or do not agree with the answer provided by anybody here, without doubt, you or any Experts can definitely question the veracity / legal basis on which the answer was provided. Such a questioning by other Experts is perfectly understandable, as ultimately whatever answer that is being provided in this LCI must have sound legal backing and should be of use to the querist.
I have on several times, questioned the answers provided by others - not with an intention to insult, but to ensure that the answer provided is having a sound footing. I never hesitated to stand myself corrected whenever my answer was wrong (either because I did not note the facts properly, or my understanding of law was wrong).
Without providing a counter point, or without questioning the correctness of any answer, simply asking the querist to consult somebody else (tax consultant, etc.), especially when somebody has already given an answer to the query, I feel is an insult to those who have provided the answer.
NOT ONLY THAT IT IS ALSO AN INSULT TO THE LCI PLATFORM where people approach for an answer thinking that out of scores of professionals who provide answer, some one or the other will answer the query (ofcourse correctly!).
(If the intention itself is to insult, my request may be completely ignored and discarded).
Regards.
atul
(Querist) 19 April 2014
MODIFIED QUERY
Anirudh
(Expert) 19 April 2014
Ultimately it boils down to the fact (as I suspected) that the source of funds for making the fixed deposit by the wife is from the husband.
According to Sec. 64 of the Income Tax Act, the interest income in the hands of the wife (though comes within the exempted limit) is liable to be included in the hands of the husband. This is because the interest being earned out of the money given by the husband to the wife.
(If the wife had an independent income - whether chargeable to income tax or falling within exemption limit - and from out of her income she makes a deposit and the interest earned will still be within the exemption limit, then she can give Form-15H right royally.
Even in the present case, she can give Form H and on that basis she will avoid TDS.
However, please note, that will not absolve you from including the said income in your income tax return and to offer it to tax. Any such non-furnishing will be treated as 'inaccurate return' and you will be visited with the consequences, which will be far severe than the amount of tax which you want to save!
Please do not make any such mistakes.
Anirudh
(Expert) 19 April 2014
MORAL OF THE STORY:
One has to ask pertinent questions / call for wanting information from the querist, before providing the answer to the query.
malipeddi jaggarao
(Expert) 19 April 2014
All the consequences discussed by expert Mr.Anirudh rounds around the source. If source is explainable, 15-H can be given and TDS can be avoided.
Dr J C Vashista
(Expert) 20 April 2014
Dear Anirudh ji,
1. I thank you for valuable suggestion.
2. Kindly go through my opinion wherein I have stated to "Consult taxation practitioner,your wife is liable for payment of income tax " do not necessarily a direction to feel so offended, that I could make out from your advise. However, there is no harm in consulting a taxation practitioner who can provide better professional advise on the issue,which I may be lacking.
3. You will appreciate to note that in the second portion I had opined, "...your wife is liable for payment of income tax" was on the basis of input given by author.
4. I fully agree and appreciate your elaborate, detailed and reasoned advise with specific provisions of law, which I feel (may be wrong and some of the LCI members may disagree with me), is neither required nor desirable on this platform since the same is to give guidance to the public for a cause i.e., a social service and not a consultancy (paid).
With warm regards.
T. Kalaiselvan, Advocate
(Expert) 21 April 2014
I agree with the views expressed by Dr.Vashista in his second post above, especially his views which reads thus: I fully agree and appreciate your elaborate, detailed and reasoned advise with specific provisions of law, which I feel (may be wrong and some of the LCI members may disagree with me), is neither required nor desirable on this platform since the same is to give guidance to the public for a cause i.e., a social service and not a consultancy (paid).
Expert Mr. Anirudh's excellent competence and knowledge in the subject field is appreciable and admirable, however, the author can afford to get this opinion by paying consultancy fees to a tax consultant, he does not appears to be so much distressed and needy deserving such an elaborate reply/opinion/advise to his query.
B.Chakrapani Warrier
(Expert) 21 April 2014
1. Form 15 H can be given to bank so as to avoid TDS on interest.
2. Since the source of the deposit is husband's savings, interest earned by wife has to be clubbed with the income of the husband u/s 64(1)iv) of the Income tax Act,1961 and tax has to be paid, if any, accordingly.
Guest
(Expert) 21 April 2014
In nutshell, if your wife fills in form 15H, the bank will not deduct TDS out of interest on FD, but she will have to show the income in her tax return and pay tax directly throgh any bank, if becomes due on interest income. If she does not fill form 15H, bank will deduct TDS and remit tax amount to the IT department.
Anirudh
(Expert) 21 April 2014
Dear Mr. Dhingra,
The position is as under:
1. If the wife gives form 15H the bank will not deduct TDS.
2. However, it is not the wife who has to file the i.t. return, but her husband who has to include the interest income in his total income and pay the applicable income tax.
3. The law specifically prohibits payment of income tax on such income earned by the wife, from out of the money given by her husband, since the Revenue even wants to avoid the chance of the wife paying income tax at lower slab rate, than the one which would be applicable to the husband.
4. If on the other hand, the wife does not give form 15H, the bank will automatically deduct TDS. HOWEVER, in that event, the wife can definitely request the bank to issue the TDS in the name of her husband in whose hands the interest income would get clubbed. The bank is obliged to issue the TDS Certificate accordingly.
Guest
(Expert) 21 April 2014
Dear Anirudh,
May be that be position. my reply was based on his simple query, as do not prefer to presume on behalf of the querist. In fact, if a querist desires some help from the community members, he must state the basic necessary facts. The querist has not yet replied your question, "Where from she got that Rs. 5 lakhs through which she has made the Fixed Deposit?"
Dr J C Vashista
(Expert) 22 April 2014
The querist is silent after posting the query whereas, we the members of LCI are scratching our heads.........??
Anirudh
(Expert) 22 April 2014
Dear Mr. Dhingra,
The querist has already confirmed that Rs. 5 lakhs had come from her husband. (The querist has modified his query and added this information). He also indicated through the post that he has modified the query.
Guest
(Expert) 22 April 2014
Dear Anirudh,
The main question was the TDS on FD. I don't think, I have written anything wrong in my reply, "if your wife fills in form 15H, the bank will not deduct TDS out of interest on FD, but she will have to show the income in her tax return and pay tax directly throgh any bank, if becomes due on interest income. If she does not fill form 15H, bank will deduct TDS and remit tax amount to the IT department."
The question was not about the principal (earning to whomsoever that belonged), the question was on the interest on FD of the wife.
I don't think the wife would not be answerable to the Assessment Officer, if she makes an FD of Rs.5,00,000 and earns interest through Fd in her name, irrespective of whether the income belonged to her husband. That is another question whether income tax has been paid or not by her husband on his earning.
So, my answer was in line with the question about TDS on interest of FD of the wife and Form 15H and the bank's responsibility to deduct or not to deduct TDS on FD. Liability of submission of tax return by wife cannot also be overuled, if she makes FD of 5,00,000 in her name and earns interest thereon and to show how she acquired such an amount.
Anirudh
(Expert) 22 April 2014
Dear Mr. Dhingra,
Sorry to point out again. You are missing the whole point, even if the wife does not give Form 15H, and TDS gets deducted, yet, her interest income will be included only in the hands of the husband and not taxed in the hands of the wife. Clubbing provision of Sec. 64 applies.
That's why, when you said that "but she will have to show the income in her tax return and pay tax directly through any bank", I pointed out the legal position.
I just thought that I can bring the legal position to your notice. When the entire purpose of the query is to know how to save tax, I am bound to point out that tax saving is not possible in the given situation. It cannot be said whether the interest will be taxed in the hands of husband or not is another matter.
Now I leave it to you.
Guest
(Expert) 22 April 2014
It would be always advisable to consult an Income Tax Practitioner regarding Income Tax and Commercial Taxes to have the Precise Reply.If anirudh feels he is capable of giving replies he could very well do it with out advising others not to give their opinion as Consult an Auditor.anirudh if you think you are a genius of every thing remember you are the biggest fool on earth.
Guest
(Expert) 22 April 2014
Author Please Consult a Senior chartered accountant and confirm the advises of above Expert and then Proceed.
Guest
(Expert) 22 April 2014
Dear Anirudh,
I understand your viewpoint and the legal provision also. My reply was not to negate your reply, but was made in line with the nature of query. About my views, "but she will have to show the income in her tax return and pay tax directly through any bank", would you kindly like to advise whether she would stand automatically exempted under the tax laws from not showing transfer of assets of her husband in her accoun?
In my views, any income, whether earned directly or got on transfer from anyone (including husband), has to be accounted for properly to the satisfaction of the tax provisions and the tax authorities. I hope you would like to agree with my contention about proper accounting in the books of individuals, may be husband or wife.
So, I don't think she can ignore in her tax return, whatever amount she has shown invested in her name, the source thereof, whether received on transfer with or without any consideration, and the earning on account of that investment.
Guest
(Expert) 22 April 2014
Another thing, the question was not on the issue whether the principal or interest income would be clubbed with the income of husband or the income be treated as wife's income.
Even the requirement of modified question was, "FOR AVOIDING TAX DEDUCTION.IS THERE ANY WAY OF AVOIDING TAX DEDUCTION," i.e., avoid bank to make TDS. I am sure there is no other way than to furnish Form 15H to put restriction on the bank to make TDS on FD, and naturally to be furnished by the person in whose name the FD is made. May that be true or false, can be another issue between the assessee and the A.O.
malipeddi jaggarao
(Expert) 23 April 2014
I go with the expert Mr.Dhingra as regards replying to the query.
Guest
(Expert) 23 April 2014
Thanks Mr. Malipeddi, for endorsing my views.
R.V.RAO
(Expert) 25 April 2014
i wish all of us to pl. make use of firm expressions but not harsh expressions on other professionals.it is not appreciated if my other experts are decribed as idiots etc..if they hold any particular view, on any issue/express same in a way they are comfortable with.
if we keep silent on this now,tomorrow the same thing becomes a practice which should be nipped in the bud itself.
if i cannot be a person with proper expression in public forums like ours,can any body expect me to be proper professional?
it is time that the moderators to filter such expressions and other experts take a stand on such expressions and insist on firm but not rude/harsh expressions.
R.V.RAO
(Expert) 25 April 2014
as for the query, if the depositor is senior citizen, she can give form 15 H to bank, to avoid TDS.
I.T sec. 64 clubbing provisions certainly apply if source of money is husband's and the investment and income is in wife's name.
but the question is, some of the assessees feel ok, who is tracking and when will IT problems arise,auditors solve the same.
Banks also claim they do not have sufficient staff to deliver the
form 15 G/H to the dept and take acknowledgement.
But,let us be careful.The IT dept.is issuing notice as and when such matters come to their attention( for transactions which took place in year 2009 which is 2010-11 assessment year, they issued notice just before 31/3/2014 which is almost after 4 years).
random scrutiny by the dept. also lands us in trouble .better be safe than being sorry later.
to drag on such matters or avoid tax hassles in matters of source for the bank deposits, i find some ladies/house wives were advised to describe the source of deposits as streedhan, accumulated over many years.
Any takers?
