Fixed Deposits in parents name

POSTED BY Vijay G ON March 2, 2013 1:51 pm COMMENTS (4)

Hi,

I wish to invest in Fixed Deposits to generate interest that can be used by my retired parents. I plan to do it in this way,

I will create a joint savings account with my dad as the primary account holder and myself as the secondary joint account holder. Then I invest in the FD linked to this savings account such that the interest is deposited every year in this savings account. My dad can use this amount when needed. Considering the interest will be below the 2L limit/year, my dad will get full tax exemption. The question is, will I have to declare any income on this interest earned?

Regards
Vijay

4 replies on this article “Fixed Deposits in parents name”

  1. Ashal Jauhari says:
    March 2, 2013 at 5:43 pm

    Dear Bharat, thanks for the update. I’m having a SB acct. for my father & there is no such restriction from bank SBI in this case.

    Thanks

    Ashal

    Reply
  2. bharat shah says:
    March 2, 2013 at 5:29 pm

    nice way Ashal suggested. however for doing fd connected with saving bank account online requires to have saving account in one name in HDFC BANK as per my understanding , so kindly confirm with your bank , so you can open saving bank account in your parent name accordingly, i.e. joint or single. any way , nomination would serve the purpose.

    Reply
  3. Vijay G says:
    March 2, 2013 at 3:10 pm

    Thanks Ashal for the quick response.

    Reply
  4. Ashal Jauhari says:
    March 2, 2013 at 2:43 pm

    Dear Vijay, from taxation point of view please do not add your name as joint holder. The way you want the set up i.e. regular income to your parents should be like this.

    Open a joint account in name of your father & mother. Put yourself as nominee only. Avail netbanking facility on this account. Now you can transfer a lump sum amount to this account. Please prepare a gift deed on plain paper that you are gifting X amount to your parents & get it signed by both, you & parents. As the amount is in that Joint account, using netbanking you can now create FDs with mly or qtly or 1/2 yly or yly interest credit option. if either of your parent is Sr. Citizen, additional interest is available there. Before doing all this, make sure both of your parents do have PAN cards. If the yly interest is more than 10K Rs., please do not forget to file form 15G/H as the case may be to avoid TDS.

    Thanks

    Ashal

    Reply

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