Income Tax Return: April is a great opportunity to proactively plan your tax strategy for the upcoming fiscal year. One effective way to do so is by utilizing Form 15G or 15H to avoid Tax Deducted at Source (TDS) on interest income from fixed deposits (FDs).
What can you do to avoid the bank deducting TDS on interest if your entire income is non-taxable?
Under section 194A of the Income Tax Act, banks are required to deduct TDS when your interest income exceeds Rs.40,000 in a year for persons other than senior citizens (the limit for senior citizens is Rs.50,000). To compute this limit, the bank combines the interest on deposits held in all of its branches.
If your total income is below the taxable limit, you can give the bank Forms 15G and 15H and ask that no TDS be taken out.
Individuals under the age of 60, HUFs, and trusts, among others, must utilise Form 15G. Form 15H must be used by those above the age of 60. Until now, all one had to do was state on the form that one's income was below the taxable limit and hence no TDS should be deducted. But, one must now include the estimated taxable income for the fiscal year. This comprises all types of income, such as salary, interest, rent, and capital gains. It is possible to avoid tax-free income such as PF, PPF, and tax-free bonds.
Forms 15H and 15G Submission Date
Forms 15H and 15G are valid for one year. The forms must be submitted at the beginning of each fiscal year.
If the forms are not submitted, the bank may have deducted the TDS. In such circumstances, you can either file the forms right away or file the ITR to get the TDS refunded.
Other than banks, where can Forms 15H and 15G be submitted?
Apart from banks, the following are some recipts where Form 15H and 15G can be submitted:
2. Post Office Deposits
3. Insurance Commission
4. LIC Premium Receipts
5. Corporate Bond Income
If your income must be combined with someone else's, do not file Form 15G. The interest income from an FD for a non-earning spouse or child must be combined with the depositor's income. Form 15G is not valid in this circumstance.
The depositor's PAN is required, and TDS must be deducted in his or her name.