Have you ever wondered why a bank immediately freezes an account the moment it receives news of a customer’s death? Or why a cheque issued before death sometimes still gets dishonoured?
And why GST and TDS—though tax topics—are repeatedly asked in banking exams?
For bankers, these are not academic questions. They are daily operational realities that directly impact compliance, customer service, and legal risk.
For JAIIB, CAIIB, IIBF, and internal promotion aspirants, these topics form a high-weightage area where conceptual clarity matters far more than rote learning.
This article provides a practical, law-backed, and exam-oriented explanation of:
- Operations in deceased accounts
- GST fundamentals relevant for bankers
- TDS provisions frequently tested in exams
If you are a banker handling deposits, compliance, or customer queries—or an aspirant aiming for conceptual mastery—this content is designed specifically for you.
Before we dive in, watch this video for a complete breakdown:
Operations in Deceased Accounts – Why Banks Act the Way They Do
When an individual account holder dies, the banker–customer relationship terminates.
Once the bank receives confirmed information of death, it loses the authority to debit the account.
Therefore:
- All operations are stopped immediately
- Cheques presented after death are not payable, even if issued earlier
The balance is payable only to the nominee or, in the absence of nomination, to the legal heirs.
A nominee is only a trustee and does not become the legal owner of funds.
Joint Accounts – One Rule Does Not Fit All
Jointly Operated Accounts
In jointly operated accounts, signatures of all holders are mandatory.
On death of one holder:
- Operations are stopped
- Payment is made jointly to surviving holder(s) and legal heirs of the deceased
The nominee becomes relevant only when all account holders die.
Either or Survivor / Former or Survivor Accounts
These accounts ensure continuity. On death of one holder:
- The survivor can operate the account
- Payment to the survivor is treated as a valid discharge
Partnership Firm Accounts and Clayton’s Rule Risk
Partnership firms carry unlimited liability.
Legally, death of any partner dissolves the firm.
Banking treatment:
- Credit balance: Operations stopped until fresh mandate
- Debit balance: Operations stopped immediately
This is to avoid the application of Clayton’s Rule, which follows FIFO logic and may unfairly increase liability of surviving partners.
Trust Accounts – Representative Capacity
Trust accounts are representative accounts.
Trustees operate accounts on behalf of the trust, not personally.
- Death of a trustee does not invalidate earlier cheques
- Operations continue as per trust deed
Company Accounts and Perpetual Succession
A company has perpetual succession.
Death of a director does not affect:
- Account operations
- Cheque validity
Ownership and management are legally distinct.
Agency Accounts – Agent vs Principal
If an agent dies, operations continue.
If the principal dies, the agency terminates immediately.
- Agent’s cheques become invalid after principal’s death
GST Basics for Bankers
GST is a destination-based indirect tax with a dual structure.
GST Components
- CGST – Central
- SGST – State
- UTGST – Union Territory
- IGST – Inter-state and imports
GST Slabs
- 0% – Essential goods
- 5% – Daily necessities
- 18% – Standard rate
- 40% – Luxury and sin goods
Composition Scheme
- Turnover limit: ₹1.5 crore (general), ₹75 lakh (special states)
- No Input Tax Credit allowed
TDS – Core Banking Compliance Area
TDS on Interest – Section 194A
- Senior Citizens: ₹1,00,000 threshold
- Others: ₹50,000 threshold
- Rate with PAN: 10%
- Rate without PAN: 20%
Declaration Forms
- Form 15H – Senior Citizens
- Form 15G – Other residents
Special TDS Scenarios
- Minor accounts: Income clubbed with guardian
- Joint deposits: TDS reflected in first holder’s PAN
- NRE / FCNR: No TDS
- NRO: Section 195 – Approx. 30% + surcharge + cess
Penalties Every Banker Must Remember
- Non/short deduction: 1% per month
- Deducted but not deposited: 1.5% per month
- Late filing: ₹200 per day (max equal to TDS)
- Wrong statement: ₹10,000 to ₹1,00,000 penalty
Conclusion
This article integrates banking law, operations, GST, and TDS into a single structured learning framework. Understanding the logic behind rules reduces operational risk and improves exam performance. Apply these concepts to real branch scenarios for maximum clarity. Engage with related content to strengthen your professional and exam readiness.
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