Opening a fixed deposit with a spouse, parent, or child is common in Indian households. The form asks one small question: the mode of operation, and many people tick whatever the bank officer suggests. That one tick decides who can claim the maturity amount and what the survivor can do if a holder dies. Tax questions follow too: whose PAN does the bank use for TDS, and who actually pays the tax? This guide explains the joint FD rules in India, the difference between “Either or Survivor” and “Former or Survivor,” and the TDS position under the Income-tax Act, 2025, which has been applied since 1 April 2026.
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What Is a Joint FD, and Why Does the Mandate Matter?
A joint FD is held by two or more people, and all holders agree on one operating instruction at the start. It rarely matters while everyone is healthy and available. It matters when one holder is ill, abroad, or no longer alive.
The common mandates are
- Either or Survivor: either holder can operate the FD. If one dies, the survivor is paid.
- Anyone or Survivor: the same, used when there are more than two holders.
- Former or Survivor: only the first-named holder can operate the FD while alive. The second holder gets rights only after the first holder’s death.
Either or Survivor vs Former or Survivor: Key Differences
| Feature | Either or Survivor | Former or Survivor |
| Maturity payout (both alive) | Either holder, one signature | Only the first holder |
| Premature closure (both alive) | Usually both signatures, unless the mandate says otherwise | Depends on the mandate given at opening |
| One holder dies before maturity. | The survivor is paid at maturity. | If the first holder dies, the survivor is paid at maturity. |
| Early closure by survivor | Needs a specific joint mandate; otherwise, legal heirs’ consent | Same |
| Best suited for | Spouses who want easy access | Parents who want control now and a clean handover later |
| Main risk | One holder can act without the other’s knowledge. | The second holder has no access in an emergency. |
The RBI has said banks shouldn’t insist on both signatures for maturity payment in “Either or Survivor” FDs. Under its 2025 directions on deceased customers’ claims, early closure of a joint term deposit after a death needs consent from the survivors and the deceased’s legal heirs, unless all depositors had given a specific joint mandate. Banks were asked to implement these directions by 31 March 2026.
Say Meera (68) and her son Arjun hold a ₹10 lakh FD as “Former or survivor,” with Meera first. Only Meera can withdraw at maturity. If she dies first, Arjun gets the proceeds. He can’t touch the money while she is alive, even if she is hospitalized.
A common mistake: many people assume “Either or Survivor” lets the survivor close the FD at once after a death. Without that specific joint mandate, banks can ask the survivor to wait for maturity or get the heirs’ consent. Ask for the premature-withdrawal clause when you open the FD, or add it later.
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Who Pays Tax on a Joint FD?
FD interest is added to your income and taxed at your slab rate. Two layers apply.
1. TDS follows the first holder. Banks usually deduct TDS and report the interest against the first holder’s PAN, so the order of names has tax consequences.
2. Actual tax follows ownership. TDS is only a prepayment. Interest is generally taxable in the hands of the person whose money funded the FD. If one spouse’s money was transferred to the other without adequate consideration, the clubbing rule in Section 99 (earlier Section 64) can add the income back to the giver. Keep records of who funded the deposit.
TDS on FD Interest in Tax Year 2026-27
TDS on FD interest, earlier under Section 194A, now sits in Section 393 of the Income-tax Act, 2025. The rate and thresholds from Budget 2025 continue.
| Situation | Threshold (per payer, per year) | Rate |
| Individuals below 60 (bank, co-op bank, post office) | ₹50,000 | 10% |
| Senior citizen, 60+ (same payers) | ₹1,00,000 | 10% |
| Company/NBFC FDs | ₹10,000 | 10% |
| No PAN, or inoperative PAN | None | 20% |
Two practical points: Once interest crosses the threshold, TDS applies to the whole interest, not just the excess. And for banks, the threshold is counted across all branches of the same bank.
Take a joint FD of ₹10 lakh, earning about ₹70,000 a year. If the first holder is below 60, the bank deducts ₹7,000. If the first holder is a senior citizen, the interest is under ₹1 lakh, and there is no TDS. This changes only the deduction, not the tax payable at filing.
Smart Ways to Manage Joint FD Tax
- Choose the first holder carefully. A senior or lower-income first holder can reduce unnecessary TDS. Check with your bank how it applies the age and PAN of joint holders.
- Use Form 121 instead of the old Form 15G/15H. If the first holder’s estimated tax for the year is nil, submit it before interest is credited. It needs a valid, Aadhaar-linked PAN.
- Report all interest in your return, even when no TDS was cut. A higher threshold doesn’t make interest tax-free.
- Reconcile before filing. Check your annual tax statement (Form 26AS, now Form 168 from tax year 2026-27) and AIS for the interest reported against your PAN.
- Seniors in the old regime can deduct up to ₹50,000 of deposit interest (earlier Section 80TTB, now Section 153).
Don’t Forget the Nominee
Survivorship and nomination are separate. Since 1 November 2025, depositors can name up to four nominees, either simultaneously (shares totalling 100%) or successively. Nominees receive the money as custodians, so keep your will, mandate and nominations consistent.
Bottom Line
Choose “Either or Survivor” for flexibility, or “Former or Survivor” for control with a clean handover. Add the premature-withdrawal mandate, pick the first holder with tax in mind, and update nominees. A few minutes at opening can save a family months of paperwork.
Frequently Asked Questions
A joint FD is a fixed deposit held in the names of two or more depositors. The account mandate determines who can operate it and what happens if one holder dies.
The key difference is who can operate the FD while both depositors are alive. Either-or-Survivor generally permits either holder to operate it, while Former-or-Survivor gives the former depositor the primary operating authority during their lifetime.
Tax liability generally follows the beneficial ownership of the deposit and the interest, rather than simply the order in which the names appear on the FD. The actual source of the funds and the parties’ ownership arrangement therefore matter.
Banks may treat the joint holders as payees for TDS purposes unless they have information establishing the beneficial ownership. CBDT guidance specifically addresses the aggregation of interest from joint deposits for TDS purposes.
No. TDS reporting and the ultimate income-tax liability are related but not always identical. The person who is the beneficial owner of the interest should generally account for the income in their tax return.
Yes, subject to the bank’s premature-closure rules and the mandate governing the FD. The interest payable on premature closure may differ from the original contracted rate.
Disclaimer
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