Tax on money transferred to survivor before death

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  1. Arun Verma

    Arun Verma New Member

    Hello Experts,

    My father passed away in 2014 after a prolonged illness for which he was hospitalized for over 1 month. I, being his son was bearing all his hospital expenses till the time I almost ran out of funds.

    Because of this, I had to prematurely close my father's FD and transferred his funds to my savings account to be able to continue his medical treatment. At that time, my father was in a vegetative state and admitted in the ICU. The money was transferred to me as I was the survivor on that account. The amount was around Rs 4.97 lacs (after deducting taxes and preclosure charges). After two weeks, my father passed away.

    Now my question is, would the amount inherited from my father's FD be taxable for me?

    Please note that this amount was transferred to my account two weeks before his death.

    Thanks a lot in advance for your valuable advice.

    Last edited: Feb 28, 2016
  2. Chandrashekar M

    Chandrashekar M Active Member

    First please check the FD and interest had a cumulative option, which means the accumulated interest on FD need to be offered to tax. If the interest receipts is not cumulative and if your late father had offered to tax the accrued interest on FD on year to year basis, you have to offer only this year's interest (upto the date of encashment) Since you have to offer the interest on FD under income from other sources, father's medical expenditure being the expenditure incidental to earning the interest can be deducted and the net of interest need to be offered to tax in your Income tax returns.
    -- Regards
  3. Arun Verma

    Arun Verma New Member

    Thanks for your reply.
    The FD was invested under MIS earning him an interest of about 3.6K a month. This was his only income.
    Also as per my knowledge, he had not submitted 15H, so TDS should have been deducted from the interest paid out as MIS.

    Does this change the tax liability on me as the legal heir?
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