Joint Fixed Deposit Rules in 2025

Joint Fixed Deposit Rules  

Here are the rules regarding a joint fixed deposit account: 

1. Operation of Account -  A joint fixed deposit account can be managed by either the primary holder or all the joint holders. The account holders have the flexibility to change this arrangement as needed. 
2. Withdrawal Mandate -  All the joint holders must agree and provide a withdrawal mandate to the bank. This mandate follows the guidelines set by the Reserve Bank of India (RBI) for joint fixed deposit accounts. 

1. Tax-Saving FD - In the case of a tax-saving fixed deposit with a duration of 5 years, the primary account holder is eligible to claim the tax deduction associated with the deposit. This means that only the primary account holder can avail of the tax benefits. 
2. Taxable Interest Income -bThe interest earned on the joint fixed deposit account is taxable. However, the tax liability falls on the primary account holder, who is responsible for reporting the interest income in their tax returns. 

Either or Survivor / Former or Survivor Clause  

1. ‘Either or Survivor’ rule -  In a joint fixed deposit operated under this rule, both depositors do not need to sign for withdrawal upon maturity. However, if one of the depositors passes away before maturity, the remaining depositor(s) cannot withdraw the money without consent from the deceased depositor's legal heirs. 
2. ‘Former or Survivor’ arrangement - In this type of joint fixed deposit, only the primary depositor can access the account. If the primary depositor passes away, the secondary depositor can gain access by fulfilling the necessary requirements and providing the required proof. 

1. ‘Survivor’ account - In a joint fixed deposit account labelled as ‘Survivor,’ either account holder can hold the account. If one account holder passes away, the survivor can continue the account and receive the final balance with interest on the due date. 
2. Access for nominated individuals -  If there are nominated individuals on the account, they will have access to the funds when the survivor passes away. 

Joint Fixed Deposit Rules for Premature Withdrawal  

1. Premature withdrawal refers to withdrawing the amount before the fixed deposit period ends. 
2. In joint fixed deposit accounts, both depositors' signatures are required for premature withdrawal. 

1. Early withdrawal requires the consent of all parties involved in the joint fixed deposit. 
2. If one depositor passes away, both the surviving depositor and the legal heirs of the deceased member must agree to the premature withdrawal. 
3. Specific provisions and variations to these rules can be discussed and determined at the time of opening the joint fixed deposit account. 

Advantages & Disadvantages of Joint Fixed Deposit  

1. Access to Maturity Value - A joint fixed deposit account allows all the account holders to access the maturity value as per the agreed-upon mandate. This makes it convenient to keep track of your finances collectively. With all the account holders being aware of the invested amount and expected interest, there is a reduced likelihood of unexpected financial surprises. 

1. Easy Sharing and Access -  Having a joint fixed deposit account enables family members located in different cities to share and access the maturity value and make premature withdrawals if needed. This flexibility can be beneficial in situations where family members are geographically separated. 
2. Simplified Financial Management -  A joint fixed deposit account provides a simple method for monitoring and managing both your finances and those of your family members. By pooling resources in a joint account, it becomes easier to track and plan for future financial goals. 

Limitations of a Joint Fixed Deposit

1. Dependency on Joint Account Holders - Since all the joint account holders have equal rights and access to the account, decisions regarding the account need to be made jointly. This can sometimes lead to complications if there are disagreements or conflicts among the account holders. 
2. Taxation Considerations - The tax implications of a joint fixed deposit account are based on the primary account holder. This means that the tax liability for the interest earned falls on the primary account holder, regardless of who contributed to the deposit. 

1. Unequal Contribution and Withdrawal - In a joint fixed deposit account, there may be instances where one account holder has contributed more or wishes to withdraw a larger portion of the funds. It is important to have clear communication and understanding among the account holders to avoid potential conflicts. 

It is important to consider these potential disadvantages when opting for a joint fixed deposit account. Understanding the rules and potential risks associated with such accounts can help you make an informed decision regarding your financial arrangements. 

1. Ineligibility for Loan Against Joint FD with a Minor - According to the rules governing joint fixed deposit accounts, you cannot obtain a loan against a joint FD if it is opened with a minor. This limitation may restrict your ability to leverage the funds in the account for financial purposes. 
2. Limited Access to Funds in Case of Account Seizure -  If one of the joint account holders engages in criminal activities that result in the seizure of their accounts, including the joint fixed deposit, it can restrict access to funds for the other account holder(s). This situation can create inconvenience and limitations in managing your own funds. 

Tax Benefits for Joint Fixed Deposit Withdrawals  

When it comes to tax benefits for joint fixed deposit withdrawals, it's important to note the following: 

1. Income tax benefits - The income tax benefits associated with joint fixed deposit accounts apply only to the first depositor. Other account holders in the joint account are not eligible for these tax benefits. This means that the tax benefits, such as deductions or exemptions, will be applicable only to the first account holder. 
2. Tax Deducted at Source (TDS) -  TDS is a tax deducted by the bank or financial institution on the interest earned from fixed deposits. In the case of joint fixed deposits, only the first account holder's Permanent Account Number (PAN) is eligible for TDS. The TDS will be deducted based on the PAN of the first account holder. 

Joint Fixed Deposit Rules for Transferring Accounts 

It's important to note that specific procedures and requirements may vary between banks. It is advisable to directly contact your bank for detailed instructions and guidance on transferring a joint fixed deposit account from one branch to another. Here are the general steps for transferring joint fixed deposit accounts: 

1. Step 1: Contact your previous bank branch: To initiate the transfer process, get in touch with the manager of your previous bank branch. Inform them about your intention to transfer the joint fixed deposit account to another branch. 
2. Step 2: Approval from the previous bank branch: You will need to seek approval from the manager of your previous bank branch to transfer the joint fixed deposit account. They will guide you through the necessary procedures and documentation required for the transfer. 
3. Step 3: Request transfer to a new bank branch: Once you have obtained approval from the previous bank branch, you can submit a request to transfer the joint fixed deposit account to a new bank branch. Make sure the new branch is within the same bank where you hold the joint account. 
4. Step 4: Complete the required procedures: Follow the instructions provided by the new bank branch to complete the required procedures for transferring the joint fixed deposit account. This may include filling out transfer forms, providing identification documents, and complying with any additional requirements specified by the bank. 

1. Step 5: Approval of transfer: Once you have completed the necessary procedures, your application for the transfer of the joint fixed deposit account will be reviewed and approved by the bank.