Split the fixed-deposit (FD) interest at the parent’s date of death. Interest attributable to the period up to death belongs in the deceased parent’s return, filed by the registered legal representative when a return is required. Interest arising after death is generally reported by the heirs if the estate has passed to them, or by the executor or administrator while an undistributed estate is being administered. The Income Tax Department says to use a time basis when income accrues day by day and another reasonable basis when it does not. Ordinary FD interest is generally reported under Income from other sources.
The correct entries depend on the death date, the FD’s accrual terms, whether a will or executor is involved, how the estate was distributed and which PAN received the bank’s tax deducted at source (TDS). Do not put the entire year’s interest in one return simply because the deposit remained in the parent’s name.
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First decide which period and taxpayer the interest belongs to
The death date is the dividing point. Work out the interest attributable to the period ending on that date and the interest arising afterwards. These amounts can belong to different taxpayers and may need different returns.
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| Interest period | Where it is normally reported | Who files or is assessed |
|---|---|---|
| From the start of the relevant tax year through the date of death | The deceased parent’s return, if a return is required | The legal representative files as representative assessee for the deceased |
| After death, where the estate has passed directly to heirs | The relevant heirs’ returns, according to their beneficial entitlement | Each heir reports the income attributable to that heir |
| After death while an estate remains undistributed and is administered | An estate assessment in the executor or administrator capacity | The executor or administrator is assessed separately from personal income |
This treatment follows the Income Tax Department’s guidance on liability in special cases: Liability in Special Cases. The legal representative’s role in filing for the deceased is explained in the Department’s Register as Legal heir of Deceased User Manual.
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Who pays tax on FD interest after the depositor dies?
There is no automatic rule that all post-death interest remains taxable to the deceased parent. Once the parent has died, later estate income is dealt with according to the estate’s legal position.
When the deposit has passed to the heirs
If the estate has passed directly to the beneficiaries, post-death FD interest is generally included by the heirs in proportion to their entitlement. The relevant heir may need to report the amount in that heir’s own return, even if the bank continues to display the deceased parent’s name on the deposit during administrative processing.
When an executor or administrator is still managing the estate
If the deposit remains part of an undistributed estate and an executor or administrator is administering it, the post-death income can be assessed in that capacity. That assessment is separate from the executor’s or administrator’s personal return. Check the will, the appointment documents, the date of distribution and the bank’s account instructions before choosing the reporting route.
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Establish the facts before entering any figure
Create a short chronology before opening a return. Record:
- the exact date of death;
- the financial year and assessment year concerned;
- the FD opening date, maturity date, interest option and compounding terms;
- whether interest is paid periodically, credited periodically, or recognized only at maturity;
- whether a will names an executor;
- who has been appointed executor or administrator, if anyone;
- when the FD or estate was distributed to beneficiaries; and
- which PAN appears on the FD, interest certificate, Form 26AS and Annual Information Statement.
These facts determine whether you need a deceased person’s return, an estate or executor assessment, an heir’s individual return, or more than one of these.
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Get the bank’s interest and TDS records
Ask the bank for an FD interest certificate or a detailed statement covering the entire relevant period. Request figures that distinguish, where the bank can provide them:
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- interest accrued or credited up to the date of death;
- interest accrued or credited after the date of death;
- the method used to calculate interest between those dates; and
- TDS deducted, the date of deduction and the PAN to which it was reported.
Reconcile the certificate with the deceased parent’s Form 26AS and Annual Information Statement and with the corresponding records for the heir, executor or estate. Keep the bank statement, calculation worksheet, death certificate and inheritance or appointment documents with the return records.
The official material establishes how income is apportioned, but it does not prescribe a universal procedure for moving TDS credit from one PAN to another when a death date splits the interest. Do not claim a TDS entry merely because you paid the tax economically. If the credit is reported under the wrong PAN, ask the bank about a correction and obtain tax advice on the claim that can properly be made for the relevant year.
How to split FD interest at the date of death
The Income Tax Department’s rule is straightforward in principle:
- income that accrues day by day is apportioned on a time basis up to and after the date of death; and
- income that does not accrue day by day is divided using another reasonable basis.
For an FD, the contract and the bank’s accrual method control. A certificate showing daily or periodic accrual may support a direct allocation. If the bank recognizes interest only at maturity, do not assume that the entire maturity amount belongs to the deceased or entirely to the heir. Ask the bank to explain the contractual accrual and obtain case-specific tax advice if no defensible split is available.
A practical allocation record
- Write the death date and the FD’s relevant interest period at the top of the worksheet.
- Copy the bank’s stated total interest and the calculation method without rounding away supporting detail.
- Identify the amount attributable to the period ending on the death date.
- Identify the amount attributable to the period after death.
- Note the estate arrangement: direct inheritance or executor/administrator administration.
- Attach the bank’s statement and explain any reasonable allocation that is not a simple day count.
If the bank’s certificate and the tax information statement disagree, resolve the difference before filing or document why the return uses the bank’s corrected statement. A date-of-death split that cannot be supported by the contract, certificate or a clear calculation is more likely to create a tax-credit or assessment problem.
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File the deceased parent’s return through the legal-heir account
Section 159 of the Income-tax Act, 1961 makes the legal representative liable for amounts the deceased would have been liable to pay and treats the representative as an assessee for this purpose. The official text states: “Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.” See the Department’s section 159 text.
When a return is required for the parent’s income through death, use the e-filing portal’s legal-heir or representative-assessee registration process rather than filing the deceased’s return as if the parent were still alive.
Documents and information for registration
The Department’s user manual identifies the legal heir’s valid e-filing account, the deceased person’s PAN, the death certificate and proof of legal-heir status among the supporting material. The portal may also ask for the representative relationship and other identification details. Follow the current workflow and upload legible documents.
- Create or use the legal heir’s own valid e-filing account.
- Open the portal option for registering as legal heir or representative of a deceased taxpayer.
- Enter the deceased parent’s PAN and the requested relationship and representative details.
- Upload the death certificate and proof establishing legal-heir status, along with any other documents requested by the portal.
- Wait for the registration to be accepted before filing the deceased parent’s return.
- Choose the deceased taxpayer’s PAN and the representative capacity when preparing the return.
The exact form, tax regime, filing deadline and portal fields depend on the relevant year and the parent’s total income and filing circumstances. Check the instructions displayed for that assessment year instead of carrying forward a form or deadline from another year.
Report the interest under the correct income head
Personal FD interest ordinarily falls under Income from other sources. Section 56 of the Income-tax Act, 1961 is the residual provision for income not chargeable under another specified head; the Department explains the same classification on its income-from-different-sources page. Confirm the return interface and statutory references for the exact tax period.
For the deceased parent’s return, enter only the interest attributable through the date of death. For an heir’s return, enter only the post-death amount attributable to that heir. For an executor or administrator, use the return or assessment route applicable to the estate in that capacity. Do not duplicate the same interest in both an estate computation and an heir’s personal return.
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How TDS and PAN issues affect the filing
Death often creates a mismatch: the bank’s system may continue to report interest and TDS under the parent’s PAN even though some income arose after death. Conversely, a bank may update the account to an heir’s PAN before the final interest certificate is issued.
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- Compare the bank’s certificate with Form 26AS and the Annual Information Statement for every PAN involved.
- Separate the income amount from the TDS amount; a correct income allocation does not by itself prove that the TDS credit is available to a different taxpayer.
- Ask the bank whether it can issue a corrected certificate or revise a wrongly reported PAN.
- Retain written explanations, correction requests and acknowledgements.
- Do not claim a credit that is absent from the claimant’s official tax records unless the applicable procedure clearly permits it and the evidence supports the claim.
The available official guidance does not set out one universal bank-correction mechanism for every split-PAN death case. That part must be checked against the bank’s process and the tax procedures for the particular year.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.1961 Act and 2025 Act references: check the transition
Official pages currently surface material from both the Income-tax Act, 1961 and the Income-tax Act, 2025, as amended by the Finance Act, 2026. The legal-representative provision in the newer text is numbered differently from section 159 in the 1961 Act. Do not combine a section number, return form or portal instruction from one Act with a filing period governed by the other without confirming the transition rule.
For the income period at issue, verify the governing statute, assessment-year instructions, return form and portal labels. The Department’s current 2025 Act text is available at Income-tax Act, 2025, as amended by Finance Act 2026. The applicable law is determined by the period and transition provisions, not simply by the date on which you happen to file.
Common mistakes and how to correct them
Putting all annual interest in the deceased parent’s return
Correct it by obtaining a date-of-death allocation and removing the post-death portion from the deceased’s computation. Report that later portion through the heir or estate route that matches the administration facts.
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Putting the full annual amount in an heir’s return
Recalculate the parent’s pre-death interest and ensure it is considered in the deceased parent’s return when required. An heir’s return should contain only the amount attributable to that heir after death.
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Ignoring the FD’s accrual terms
A credit at maturity does not automatically establish that all interest accrued to the deceased or all of it accrued to the heir. Use the contract and bank calculation; where the contract does not support a simple time split, document a reasonable method and obtain professional advice.
Claiming TDS under the wrong PAN
An amount shown in one taxpayer’s Form 26AS is not automatically transferable to another taxpayer. Seek a bank correction and check the applicable tax-credit procedure before claiming it.
Using an old form or section number
Check the assessment year’s return instructions and the Act in force for that income period. This is particularly important while official materials contain both 1961 and 2025 Act references.
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Section 159(6) of the 1961 Act generally limits the legal representative’s liability to the extent the estate can meet the deceased’s liability, subject to the statute’s conditions. Read the provision and obtain advice for disputed or substantial liabilities rather than assuming personal assets are automatically exposed.
Documents to keep with the computation
- death certificate;
- deceased parent’s PAN and the legal heir’s PAN;
- proof of legal-heir status;
- will, probate or letters of administration, where applicable;
- executor or administrator appointment documents, where applicable;
- FD advice, contract and renewal records;
- bank interest certificate and detailed accrual statement;
- Form 26AS and Annual Information Statement for each relevant PAN;
- date-of-death allocation worksheet; and
- proof of distribution or transfer of the estate to beneficiaries.
A decision checklist before you submit
- Have you recorded the exact date of death and the financial year?
- Does the bank statement identify interest through death and after death, or do you have a documented reasonable allocation?
- Is the parent’s pre-death income being filed through an accepted legal-heir registration where a return is required?
- Has the estate passed directly to heirs, or is an executor or administrator still managing it?
- Does each taxpayer report only the interest attributable to that taxpayer or capacity?
- Do the income and TDS figures reconcile with the official tax information statements?
- Are the return form, tax regime, deadline and statutory references correct for the relevant income period?
If any answer is no, pause the filing and resolve that item. A clear date split, a documented estate status and reconciled PAN records are more important than copying the amount shown on a single bank certificate.
Where to verify the official process
Use the Income Tax Department’s Register as Legal Heir FAQs and the legal-heir user manual for current portal requirements. Use the Department’s special-cases guidance for the pre-death and post-death allocation principle, and the relevant Act text for the year in which the income arose.
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