TDS Status in case Deposit in two or more Names
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 section 194A of the Act. 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 payers in their separate or independent accounts. The persons responsible for deducting the tax are advised that, in the absence of account with the interest on deposit in the individuals account who has higher interest income. Thus, if there is a deposit of Rs. 15,000 in joint account of M/S AB and there are deposits of Rs. 32000 in the name of A and Rs. 3000 in the name of B with the same payer, the rate of interest being 12% per annum, the payer may aggregate the interest in the joint account amounting to Rs. 1800 with the interest of Rs. 3840 on the deposit of A and since the aggregate interest during a financial year exceeds Rs. 5000 he may deduct the tax at the prescribed rate. The fact that the joint account may be styled as M/S AB instead of M/S AB will not make any difference. [Circular No. 256, dated 29-05-1979].
Under the existing provisions of the Income-tax Act, credit for tax deducted at source is to be given to each co-owner in cases of jointly owned securities or shares in a company, in the same proportion in which the interest on such securities or dividend on such shares in assessable as income of each of such owners.
Through the Act, the scope of the aforesaid provision has been enlarged so as to cover other situations also in which income which is subject to deduction of tax at source is assessable in the hands of two or more persons. For this purpose, the scope of the existing provision to allow credit for tax deducted as source is owned deposits or jointly owned united apart from jointly owned securities or shares in a company. [Circular No. 762 dated 18-02-1998].