Clipped from: https://www.thehindubusinessline.com/portfolio/personal-finance/tax-query-tds-exemption-on-bank-interest/article69958988.ece
Taxation for senior citizens earning less than Rs 12 lakh and implications of MF units transferred to family members
1 I am a senior citizen and an income tax assessee. My annual income comprises of:
Pension – ₹5.28 lakh
Interest on bank deposits – ₹2 lakh
Dividend income anticipated – ₹1.20 lakh
Can I get the form 15H for exemption from TDS on bank interest, pension and dividend amount exceeding ₹10k? My total anticipated income is well below ₹12 lakh.
N. Kalyanasundaram
Under the new tax regime for the tax year 2025-26, there will not be any tax liability so long as the total income is upto ₹12 lakh. Accordingly, considering your total income from pension, bank deposits and dividend as stated above, you may not have a tax liability. Consequently, in accordance with Section 197A(1C) of the Income Tax Act, 1961(“IT Act”), Form 15H can be submitted to the bank and get away from tax withholding.
2With the recent changes in mutual fund regulations, one could transfer mutual fund units held in physical form to one’s “relatives”. These transfers take place at the valuation on the date of the transfer. If I were to transfer the units, held in joint name with me and my wife as the holders, to my brothers (siblings):
* Will there be capital gains tax to be paid by anybody?
* Will the units received by my brothers be subject to any tax in their hands?
If my wife transfers some of the units held in joint names, with she as the first holder and me as the second holder, to folios with me as the first holder and she as the second holder, will it attract any tax on any of us?
Murli Krishnamurthy
As per Section 47(iii) of the Income Tax Act, any transfer of a capital asset by an individual through a gift, will or under an irrevocable trust is not regarded as a ‘transfer’ for tax purposes. Therefore, transferring mutual fund units to your brother—who qualifies as a relative under the Act—is not a taxable transaction for either of you. The term relative is defined to include the brother of spouse. Hence, there will not be any capital gains tax implications.
The units received by your brother will not be taxed at the time of receipt, as the transfer is not considered a taxable transaction in terms of section 56(1)(x). However, any gains arising from the sale of these units in the future by your brothers will be treated as capital gains and taxed accordingly.
The change in the order of holders does constitute as transfer and it would not attract any tax.
The writer is Partner, Deloitte India
Published on August 23, 2025
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