Regarding Clubbing of Interests & Refund of TDS

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  1. Adarsh Bhaskar

    Adarsh Bhaskar New Member

    Respected Sir,
    Facts for FY 2015-16 (AY 2016-17):
    (1) A Salaried Employee "A" having salary account in Bank "X", earned interest Rs. 15000 (i.e. 8000 on saving + 7000 on FDs Accrual basis) and No TDS was deducted by Bank "X".
    (2) "A" has a major daughter (with no income but having PAN) studying in professional college but getting fee waiver scholarship. So in consideration, "A" opened joint account with daughter as primary holder in Bank "Y" and earned interest of Rs. 2500 (on FDs receipt basis) and the bank "Y" deducted Rs. 250 as TDS against "A"'s PAN c(i.e period for which daughter's PAN was not provided to the bank). Apart the account also earned interest of Rs 11000 (i.e. 600 on saving + 10000 on FD on receipt basis + 400 on FDs on accrual basis). The bank deducted additional TDS of Rs. 1000 against the daughter's PAN.
    (3) "A" has another joint account with minor son (with no income and no PAN) in Bank "Z". Minor son is primary account holder. Interest earned in this account was Rs. 15700 (i.e. 700 on saving + 15000 on FDs receipt & accrual basis). Bank deducted TDS of Rs. 3000, but Form 16A has not been provided by bank.
    (4) The salaried person "A" comes in the Tax slab of 10% even after including all the above said interests earned and has even paid excess TDS from salary.
    Now since person "A" has to file ITR-1, it is requested to reply/ guide regarding the following:-
    (1) How "A" should file ITR-1 under "Income from other sources"?
    (2) How to claim refund of Rs. 1000 TDS deducted against major daughter's PAN (by Bank "Y")?
    (3) How to claim refund of Rs. 3000 TDS deducted against minor son's PAN where Form 16A is not being provided by the bank "Z"?
  2. ZED

    ZED Well-Known Member

    A should not include the income on which the tax has been deducted on daughters name.

    Daughter should file the return of income and claim the refund of TDS.

    TDS has been u/s 206AA because PAN has not been submitted and hence the rate is 20%.

    Inform the bank that this income belongs to you and ask them to issue the TDS certificate.

    Nevertheless, this income needs to be clubbed in your income and if bank do not revise their TDS return and do not issue TDS certificate in your name then A's son will have to get PAN and his return would be required to be filed and bank will have to revise the TDS return, crediting the TDS in A's son name. [In this case bank will have to revise TDS return.]

    You should have given declaration to the bank that this income belonged to you and will be clubbed in your hands.
    Refer Rule 37BA of the Income Tax rules, which specifically covers such situations.
  3. Adarsh Bhaskar

    Adarsh Bhaskar New Member

    Respected Sir,

    Thanks for your valuable guidance. As per advice reply point (3) above, action has been accomplished.

    Further, as per advice points (1) & (2) above, kindly guide that while filing daughter's return to claim TDS refund:-
    (a) What income should be shown while filing return? - i.e. should this be only the interests earned on the savings and FD accounts, OR, apart from the interests should it also include the contributions made by parents to her bank accounts?
    [Facts point (2) is reiterated that the major daughter do not have any income of her own being a student in professional college. But in consideration of fee waiver scholarship, which otherwise parents were to pay, parents are contributing this in her saving account, plus, she also gets some petty amount from grand-parents]

    (b) Is this income to be shown under "Income form other sources"?
  4. ZED

    ZED Well-Known Member

    Show both the interest income from FD and Saving bank.
    Saving bank income is allowed as deduction to the extent of 10,000 u/s 80TTA.

    Money given by parents to a MAJOR child is a gift and is not taxable.[Explanation to S.56(2)(vii)]

    Your query is not clear, kindly read the following extracts

    80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.

    (e) "relative", in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
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