My family (4 members) has a joint bank account to which several share dividends are credited. Now my father is no more so how can we identify in whose name(s) the dividends are being credited?
We all have individual/separate accounts too in the same bank. Dividends from some of the same companies are also credited to my individual account. For example, XYZ company has given dividend in individual account in Sept 1 for X amount while same company has credited Y amount in joint account on Nov 1. Dividend declared and total dividend received correspond to the number of shares I hold in both cases. Does this mean those are my shares? I am confused.
If I want to close the joint bank account and transfer those shares to the rightful owner (me, my sibling or my mother), how can we identify correctly to whom the dividend is coming?
My foremost suggestion here is that to close the Joint Account unless you are having separate legal registration as a HUF and declaring the same under HUF.
As per Income Tax rules any income from investment should be charged to tax under the name of the person who initially invested the amount despite others being its stakeholders who didn’t invest any money.
So in your case, I believe your late father has invested the money, and hence all dividends must be declared in the name of the legal heir and not in any proportioante manner even if any written deed tells.
Income Tax also says that the Income so arrived should be reported in the name of the person who has highest Income. That is if your Income is say 10 Lakh and your siblings or mother are earning say less than 10 Lakh then entire dividend amount will be reported under your name. The only option to overcome this is to close the joint account, and transfer those shares to a specific person, or multiple person calling it a gift.
Can you clarify why the confusion with the dividends is occurring? It looks like they are mine going by CDSL info and the amounts (number of shares x dividend amount declared) but why are they going into two accounts? How can I be sure they are mine? Will the bank be able to help me?
I don’t know why the dividend is paid out to separate accounts at different point of time. But it will not be done automatically, and I believe that you have triggered something like changing bank account with the broker, doing reKYC and giving joint account name.
If your bank itself is your broker than you may check with them about what account is linked to your demat and change that as per your needs.
As per Income Tax, Income tax should be paid by the rightful owner even if the receipient is someone else.
Lets say you made some arrangement with you employer to transfer some part of your salary to your wife, in this case the full salary will be taxable in your hands and no part in your wife name. Here its called application of Income. The same is happening in your case. You have to report the dividend in a single person’s name even if received in multiple accounts if share holding is not bifurcated to separate demats.
The best option you have is to close the joint account and transfer the funds to your sibling or family member you choose. This will clear any future issues that may arise due to paying income tax. And It’ll all be clear in the papers. Good luck!