ITR filing & joint bank accounts: How to avoid tax notices on FDs under AIS reporting
Joint bank accounts offer convenience for couples and families, but they can create unexpected tax complications when transactions like fixed deposits are reported under both account holders’ PANs. Taxpayers must understand how to correctly disclose contributions to avoid notices or reassessment under Sections 148A and 133(6).
- Sep 2, 2025,
- Updated Sep 2, 2025 3:01 PM IST
I hold a joint bank account with my spouse. Recently, I noticed that a fixed deposit of Rs 10 lakh made by me is being reflected in both our Annual Information Statements (AIS) as if each of us invested the full amount. Despite clarifying this in AIS feedback, the response was rejected under Rule 114E(2). Why are banks reporting joint transactions twice, and how can genuine joint account holders avoid unnecessary tax notices or reassessment under Sections 148A or 133(6)?
Advice by CA Dr Suresh Surana, tax expert and advisor
Many families and senior citizen couples find joint bank accounts convenient. Whether it is with a spouse, parents, or children, these accounts make it easier to pay household bills, manage EMIs, and handle shared savings. On the surface, joint accounts look simple, but hidden beneath is a risk that often goes unnoticed—tax complications.
In cases of joint bank accounts, banks are required under Rule 114E(2) of the Income-tax Rules, 1962 to report specified financial transactions, including fixed deposits, by linking them with the PAN of each joint holder. As a result, when one account holder makes a deposit (say Rs. 10 lakh), the system may reflect the same transaction in the Annual Information Statement (AIS) of both holders, without apportioning the investment based on ownership or contribution.
For genuine joint holders, this may results in mismatch during AIS reconciliation. In case where the amount is not corrected even after AIS feedback is submitted, taxpayers should disclose the fixed deposit correctly in the hands of the contributor. Supporting documents such as bank statements and investment proofs should be maintained, so that in the event of an enquiry under Section 148A (reassessment proceedings) or a query under Section 133(6) (information requisition), the taxpayer can substantiate that the investment was funded by one holder only.
As the deadline for filing Income Tax Returns (ITR) approaches, joint account holders must understand how these accounts can lead to an unexpected tax notice. The problem begins with how banks report interest income. For every joint account, the bank records interest against each account holder’s name. However, according to tax rules, only the true owner of the funds is required to report that income. This mismatch creates confusion during data cross-checks by the Income Tax Department.
For example, if one family member contributes most of the money but another reports the income under their PAN, the system highlights it as an error. This leads to notices being sent to both account holders. Such mistakes are especially common with fixed deposits, where interest is often reported incorrectly.
To avoid this stress, taxpayers should maintain clear records of fund ownership, ensure interest income is declared under the rightful PAN, and avoid casually mixing personal funds in family accounts. With the ITR due date of September 15 drawing near, taxpayers must not delay filing and must ensure accuracy. Joint accounts may offer convenience, but careful reporting is the only way to stay clear of trouble.
I hold a joint bank account with my spouse. Recently, I noticed that a fixed deposit of Rs 10 lakh made by me is being reflected in both our Annual Information Statements (AIS) as if each of us invested the full amount. Despite clarifying this in AIS feedback, the response was rejected under Rule 114E(2). Why are banks reporting joint transactions twice, and how can genuine joint account holders avoid unnecessary tax notices or reassessment under Sections 148A or 133(6)?
Advice by CA Dr Suresh Surana, tax expert and advisor
Many families and senior citizen couples find joint bank accounts convenient. Whether it is with a spouse, parents, or children, these accounts make it easier to pay household bills, manage EMIs, and handle shared savings. On the surface, joint accounts look simple, but hidden beneath is a risk that often goes unnoticed—tax complications.
In cases of joint bank accounts, banks are required under Rule 114E(2) of the Income-tax Rules, 1962 to report specified financial transactions, including fixed deposits, by linking them with the PAN of each joint holder. As a result, when one account holder makes a deposit (say Rs. 10 lakh), the system may reflect the same transaction in the Annual Information Statement (AIS) of both holders, without apportioning the investment based on ownership or contribution.
For genuine joint holders, this may results in mismatch during AIS reconciliation. In case where the amount is not corrected even after AIS feedback is submitted, taxpayers should disclose the fixed deposit correctly in the hands of the contributor. Supporting documents such as bank statements and investment proofs should be maintained, so that in the event of an enquiry under Section 148A (reassessment proceedings) or a query under Section 133(6) (information requisition), the taxpayer can substantiate that the investment was funded by one holder only.
As the deadline for filing Income Tax Returns (ITR) approaches, joint account holders must understand how these accounts can lead to an unexpected tax notice. The problem begins with how banks report interest income. For every joint account, the bank records interest against each account holder’s name. However, according to tax rules, only the true owner of the funds is required to report that income. This mismatch creates confusion during data cross-checks by the Income Tax Department.
For example, if one family member contributes most of the money but another reports the income under their PAN, the system highlights it as an error. This leads to notices being sent to both account holders. Such mistakes are especially common with fixed deposits, where interest is often reported incorrectly.
To avoid this stress, taxpayers should maintain clear records of fund ownership, ensure interest income is declared under the rightful PAN, and avoid casually mixing personal funds in family accounts. With the ITR due date of September 15 drawing near, taxpayers must not delay filing and must ensure accuracy. Joint accounts may offer convenience, but careful reporting is the only way to stay clear of trouble.