TaxTMI 
TaxTMI 
Parents deposit fixed deposits in the name of children. when the child grows up and gets a job he has to pay income tax. then how can he declare the income from fd deposited by parents. how will they prove the source.
income tax
10 Sep 2016 
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Taxation of minor's bank interest: interest taxed in parents' hands until majority; TDS follows PAN registration.
Interest on fixed deposits in a child's name is treated as parents' income until the child attains majority; banks deduct TDS on interest as it accrues and attribute TDS to the parents' PAN while the child is minor, and after majority subsequent interest and TDS are attributable to the child's PAN. Transfers from parents to children may be shown as gifts and are not taxable in the recipient's hands. (AI Summary)
Interest on fixed deposits in a child's name is treated as parents' income until the child attains majority; banks deduct TDS on interest as it accrues and attribute TDS to the parents' PAN while the child is minor, and after majority subsequent interest and TDS are attributable to the child's PAN. Transfers from parents to children may be shown as gifts and are not taxable in the recipient's hands. (AI Summary)