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Banks must deduct and report tax deducted at source on interest earned under the Capital Gains Accounts Scheme, 1988 using the permanent account number of the deceased depositor for the period up to death. For the period after death, banks must deduct and report tax deducted at source using the permanent account number of the legal heir. This requirement applies unless a person files a declaration under sub-rule (2) of Rule 37BA of the Income-tax Rules, 1962.
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Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income-tax (Systems) New Delhi Notification No. 08/2017 New Delhi, 13'th, September, 2017
Subject: - TDS on interest on deposits made under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased - reg.-
It has been brought to the notice of CBOT 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 th e 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 forthe period after death ofthe depositor is required to be issued on the PAN of the legal heir.
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 50 specified.
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.
(P .. T ingaleng) Dy. Commissioner of Income-tax (CPC-TDS), 0/0 the Pro Director General of Income-tax (Systems), New Delhi
Copy for kind information to:-
[Image omitted. See the official document.]
Dy. Commissioner of Income-t (CPC-TDS), 0/0 the Pro Director General of Income-tax (Systems), New Delhi
