TDS on interest of a deceased – Notification no. 8/2017 dated 13.09.17
In cases of deceased person,the TDS certificate on the interest income( from deposits made in Capital Gains Accounts Scheme, 1988) should be issued in two parts.
– One for and upto the period of death of the depositor is required to be issued on the PAN of the deceased depositor.
– and the other one for the period after death of the depositor is required to be issuedon the PAN of the legal heir.
Before the notification no. 08/2017 dated 13th September,2017 was issued the practice adopted by the banks was to deductTDS on the interest earned on such deposits in the hand ofthe deceased depositor and issue TDS certificates in the name of the deceased depositor, which was not correct or was not in accordance with the law. When this was brought to the notice of CBDT, the notification no. 8/2017 dated 13th September, 2017 was issued for instruction to Banks to bring the above changes in accordance with the law.
TheCapital Gains Account Schemewas introduced in the year1988, and as per theCapital Gains Account Schemethe amount ofcapital gainsto be claimed as an exemption should be either be re-invested or deposited in theCapital Gains Accountbefore the due date of filing of returns.

TDS on interest of a deceased – Notification no. 8/2017 dated 13.09.17

Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income-tax (Systems)
New Delhi

Notification No. 08/2017

New Delhi, 13th, September, 2017

 
Subject: – TDS on interest on deposits made under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased – reg.-
1.) It has been brought to the notice of CBDT that in cases of deceased depositor who has made deposits under the Capital Gains Accounts Scheme, 1988; the banks are deducting TDS on the interest earned on such deposits in the hand of the deceased depositor and issuing TDS certificates in the name of the deceased depositor, which is not in accordance with the law. Ideally in such type of situations, the TDS certificate on the interest income for and upto the period of death of the depositor is required to be issued on the PAN of the deceased depositor and for the period after death of the depositor is required to be issued on the PAN of the legal heir.
2.) Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner s0 specified.
3.) In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby specifies that in case of deposits under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased:
i.) TDS on the interest income accrued for and upto the period of death of the depositor is required to be deducted and reported against PAN of the depositor, and
ii.) TDS on the interest income accrued for the period after death of the depositor is required to be deducted and reported against PAN of the legal heir, unless a declaration is filed under sub-rule(2) of Rule 37BA of the Income-tax Rules, 1962 to that effect.
4.) This issues with approval of the Principal Director General of Income tax (Systems).

-sd

(P.S. Thuingaleng)
Dy. Commissioner of Income-tax (CPC-TDS),
0/0 the Pr. Director General of Income-tax (Systems),
New Delhi

.You May Also Like:

Linking PAN-Aadhaar A Must For I-T Returns Says Supreme Court