If Fixed Deposit is opened in the name of son, then who will have to pay tax on interest? Know the rules

Talking about the regulation of tax on Fixed Deposits, investing in tax saving FD gives tax exemption of up to 1.5 lakh in a financial year. This exemption is available under section 80C.

TDS will be deducted on annual interest income above 40 thousand.

fixed deposit ,Fixed Deposits) is the traditional means of investment. However, due to declining interest, investor interest in it has decreased in the recent past. If you are a senior citizen and open an FD in the name of your adult child, then what are the rules regarding tax, let us know about it. as we know fixed deposit I am taxed on interest income. If the interest income exceeds a limit in a financial year, then the bank tax deduction at source ,TDS) also cuts. No TDS is deducted on interest income up to 40 thousand. TDS is deducted if there is more income than that. The interest earned from fixed deposits is included in your income. You have to pay tax at the rate of the tax slab you fall in.

If a parent opens a fixed deposit in the name of his adult child, then it is important to understand the tax rules. According to tax experts, this transaction made by the father to the adult child will either come as a gift or can be shown as a loan. If the parent gives this to his child as a gift, then it will be completely tax free. Gift received from relative is completely tax free.

Your right ends after giving a gift

You can also give this amount as a loan to an adult child. Later he invests this amount in fixed deposits. Now the income from the interest will be fully taxable. It should be kept in mind that if you give this amount to your child as a gift, then your right ends with that amount. The amount received by the children will be completely tax free as there is no tax on gift money.

Rules regarding tax on FD

Talking about the regulation of tax on Fixed Deposits, investing in tax saving FD gives tax exemption of up to 1.5 lakh in a financial year. This exemption is available under section 80C. Interest income on FD is taxable. The interest amount gets added to your total income. Later, tax has to be deposited according to the tax slab. If the interest income is more than 40 thousand in a financial year, then TDS is also deducted.

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