My elder brother had made two fixed deposits in the bank jointly with me. But, he expired before the deposits matured. I have only given intimation of death of my brother to the bank authority. At the same time, I am also paying tax on the interest accrued on these FDs. The bank officials could not show me any specific rules in this regard. Please advice.

Subrata Chatterjee, Kalindi

According to RBI guidelines, in case of term deposits with “either or survivor” clause or “former or survivor” clause, the banks are permitted to allow premature withdrawal of deposits by the surviving joint depositor on the death of the other only if there is a joint mandate from the depositors.

The joint deposit holders are permitted to give the mandate either at the time of placing the fixed deposit or anytime during the term/tenure of the deposit. Since, in your case, it would not be possible to obtain joint mandate now you have to obtain concurrence of the legal heirs of the deceased joint deposit holder.

Such premature withdrawal would not attract any penal charge. If however, you want to continue with the deposit till the maturity, the bank shall have to pay interest at the contracted rate.

Family fortune

My wife and I have a joint savings bank account. If I open a fixed deposit in the name of my wife, will there be tax liability in respect of principal or interest on either her income or mine? If the interest is below her taxable limit shall it be clubbed with mine?

A Dey, Dumdum

You are looking to open a fixed deposit in the name of your wife. Assuming that she is a housewife with no independent source of income, the tax liability would be in your hand since you are making the investment on behalf of your wife. The provisions of clubbing under section 64 of the Income Tax Act would be applicable and your wife's interest income would be clubbed along with yours for computation of income tax.

If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abp.in, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.