Deepak Gupta | Apr 11, 2017 |
Forms 15G and 15H : How to save TDS on Interest Income
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First quarter of the financial year has already started and it is important, for all the people who want to receive interest income without deduction of tax, to submit form 15G and 15H immediately to the banks. Individual investors shares Form 15G and 15H with Banks to avoid tax deduction at tax. However, one should take due care while submitting these forms.
What can you do to make sure bank does not deduct TDS on interest, if your total income is not taxable Banks have to deduct TDS when interest on fixed deposits as well recurring deposits taken together exceeds Rs. 10,000 in a financial year, for all the branches of the bank taken together, for the bank with core banking. Otherwise the threshold of Rs. 10,000 is to be calculated for each branch. Please note while determining the threshold of Rs. 10,000 interest on your saving bank account shall not be taken into account.
There is an confusionin the minds of people that fixed deposit with tenure of more than one year, the tax is deducted only at the time of maturity of the FD, i.e. at the time of payment of the interest. This is not so. The bank calculates proportionate interest for the period ended on 31st March and will deduct tax, in case interest is more than 10,000 for a year.
But if your total income is below the taxable limit, you can submit Forms 15G and 15H to the bank requesting them not to deduct any TDS on your interest.
Form 15G and Form 15H are forms you can submit to make sure TDS on your interest income is not deducted if you meet the conditions. Also, you must have a PAN before applying for these forms. Some banks allow these forms to be submitted online through the banks website.Form 15H is for senior citizens, those who are 60 years or older; while Form 15G is for everybody else.
Form 15H :- Declaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made by an individual who is of the age of sixty-five years or more (Sixty Years from 1st July, 2012)claiming certain receipts without deduction of tax.
Form 15G :- Declaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax of tax.
Income of | Shobha | Ravi | Shikha | Keshav |
---|---|---|---|---|
Age | 52 years | 25 years | 67 years | 70 years |
Salary | Rs. 1,90,000 | |||
Pension | Rs. 1,00,000 | |||
Fixed Deposit interest income | Rs. 85,000 | Rs. 2,60,000 | Rs. 1,80,000 | Rs. 3,30,000 |
Total Income before allowing section 80 Deductions | Rs. 2,75,000 | Rs. 2,60,000 | Rs. 2,80,000 | Rs. 3,30,000 |
Deductions under section 80 | Rs. 45,000 | Rs. 30,000 | Rs. 10,000 | Rs. 55,000 |
Taxable income | Rs. 2,30,000 | Rs. 2,30,000 | Rs. 2,70,000 | Rs. 2,75,000 |
Minimum exempt income | Rs. 2,50,000 | Rs. 2,50,000 | Rs. 3,00,000 | Rs. 3,00,000 |
Eligible to submit Form 15G | Yes | No | No | No |
Eligible to submit Form 15H | No | No | Yes | Yes |
Explanation | Form 15G can be submitted as age is less than 60 years. Total tax is nil and interest income is less than minimum exempt income. | Form 15G cannot be submitted since interest income is more than minimum exempt income. | Form 15H can be submitted if age is more than 60 years and tax calculated on total income is nil. | Form 15H can be submitted as age is more than 60 years and tax calculated on total income is nil. Form 15H can be submitted although interest income exceeds inimum exemption limit. |
While these forms can be submitted to banks to make sure TDS is not deducted on interest, there a few other places too where you can submit them.
A lot of taxpayers forget to submit Form 15G and Form 15H timely. In such a situation TDS may already be deducted by the bank.
To claim refund of excess TDS deducted, start filing your return.
So to conclude please file your form 15 G or 15H only if you are eligible to file the same and have it filed before the bank actually deducts any tax on it and mention your PAN correctly.
HUF can submit Form 15G if it meets the conditions but Form 15H is only for individuals.
NRIs cannot submit Form 15G or Form 15H, these can only be submitted by resident Indians.
Yes, you must submit at each branch of the bank from which you will receive interest income. Although, TDS is deducted when total interest earned from all branches exceeds Rs 10,000 in total.
Form15G/Form15H is only a declaration that no TDS should be deducted on your interest income since tax on your total income is nil. Interest income from fixed deposits, recurring deposits, and corporate bonds is always taxable.
Interest income from fixed deposits and recurring deposits is taxable. You should submit this form only if tax on your total income is zero (and you meet other conditions listed above).
You must intimate to your bank that tax on your total income is not zero. The bank will make changes and deduct TDS. You should report the entire interest income in your tax return and pay tax on it as applicable.
These forms dont have to be submitted to the income tax department by you. When you submit them to the deductor, he/she will prepare and submit to the income tax department, a detail of all such forms received.
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