Bank FDR in joint name of Husband and wife: Taxation & TDS


Bank FDR in joint name of Husband and wife:

Taxation & TDS



Myself and my wife have a bank FDR in a joint name. In whose hands the interest will be taxable? Whether the taxation would be there on the basis of first name in FDR? Whether the TDS can be deducted as per our instructions to the bank or it will be done in the first name only?


  1. As far as joint deposit in the name of husband and wife is concerned, the taxability arises in the hands of the person to whom the fund actually belongs at the time of investment.
  2. Whether the name of the husband is first or the name of the wife is first won’t make the difference as far as its taxability is concerned.
  3. Even if the husband invests the money in the name of the wife without his name then also the interest income would be taxable in the hands of the husband due the clubbing provision contained in section 64.
  4. It may be noted that the amount invested by the wife out of his household savings (Pin Money) is not subject to the clubbing provision.
  5. The above inferences are based on Departmental view of joint deposits as expressed for TDS U/s 194A of the Act in following words :
    “The Board are advised that in the case of a deposit in joint names, say in two names, in the absence of any proof to the contrary, both the persons can be treated as payees for the purpose of deduction of tax under s. 194A. As such, unless the person paying the interest on such deposit(s) has definite information about the beneficial ownership of the deposit(s), the interest payable under a joint account can be aggregated with the amount of interest payable by that person to any one of the payees in their separate or independent accounts. The persons responsible for deducting the tax are advised that, in the absence of any information to the contrary, they may aggregate the interest on a joint account with the interest on deposit in the individual’s account who has higher interest income. Thus, if there is a deposit of Rs. 5,000 in a joint account of XY and there are deposits of Rs. 4,000 in the name of X and Rs. 3,000 in the name of Y with the same payer, the rate of interest being 13 per cent per annum, the payer may aggregate the interest in the joint account amounting to Rs. 600 with the interest of Rs. 480 on the deposit of X and since the aggregate interest during a financial year exceeds Rs. 1,000 he may deduct the tax account may be styled as XY instead of XY will not make any difference.”