Fixed Deposits (FDs) are a popular savings option for those looking to secure their money with guaranteed returns.
You can also combine family finances by opening a joint FD with your spouse, parent, children, or other family
members, thereby using it effectively for financial planning.
What is a Joint Fixed Deposit?
A Joint Fixed Deposit account is a type of FD
where up to 3 people can pool their money together into a single FD. This account includes details of all the
depositors, but the interest income is credited to the primary depositor. This setup can be particularly useful for
families, as it allows members to collectively manage and access funds.
Joint Fixed Deposit account rules
1. Minimum deposit amount
To open a Joint Fixed Deposit account, banks seek a minimum deposit
between ₹1,000 and ₹15,000. It’s crucial to check with your bank for specific minimum deposit requirements.
2. Withdrawal policy
You can withdraw funds from a Joint FD depending on the clause that the FD
operates on. The clauses applicable to Joint FDs are -
- 'Either or survivor' clause: Any depositor can withdraw the funds upon maturity. In case one
depositor passes away, the surviving depositor(s) can access the funds.
- 'Former or survivor' clause: Only the primary depositor can operate the account during their
lifetime. The second / third depositor gain access only after the primary depositor passes away.
- 'Anyone or survivor' clause: Any of the joint account holders can operate the account. If one
depositor dies, the remaining depositors can still manage the account.
- 'Nominee' clause: The selected nominee(s) can operate the Joint FD account after the survivors
pass away.
3. Premature withdrawal rules
Premature withdrawal refers to breaking the Fixed Deposit before
its term ends. For joint accounts, the consent of all depositors is usually required. If one of the depositors
passes away, the surviving members and the legal heirs of the deceased must agree to the withdrawal.
4. Tax implications
Tax benefits and liabilities of a Joint Fixed Deposit apply to the primary
depositor.
- Tax deduction at source: TDS is deducted based on the PAN of the primary depositor. This means
they are responsible for reporting the interest income and paying the applicable taxes.
- Tax-Saving FD: In a Tax-Saving Fixed
Deposit, only the primary account holder can claim tax deductions under Section 80C of the Income Tax
Act.
Pros and cons of Joint Fixed Deposits
Advantages
- Shared access: All account holders can access the maturity value.
- Convenience: Joint Fixed Deposit accounts allow geographically separated family members to
manage and withdraw funds.
- Simplified financial management: Pooling resources in a joint account simplifies tracking and
planning for combined future financial goals.
Limitations
- Dependency on joint decisions: All decisions must be made collectively, which can lead to
complications if disagreements arise.
- Taxation: Tax savings can be claimed by the primary depositor only, regardless of each member's
contribution.
- Legal issues: In cases of legal action against one depositor, the entire account may be
affected, restricting access for other members.
Also Read: Fixed Deposit
(FD) rules and regulations in India
Conclusion
A Joint Fixed Deposit is a practical option for families looking to save together. Understanding the rules and
implications of these accounts can help you make the best decision for your financial future.
Axis Bank Fixed Deposits offer flexible tenures starting from as short
as 7 days and allow you to start small with a minimum deposit of just ₹5,000 via the mobile app. With the right bank
and the right product, like those offered by Axis Bank, you can ensure your savings are always secure and growing.
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd.
and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader
for taking any financial decisions based on the contents and information. Please consult your financial advisor
before making any financial decision.
