TDS (Tax Deducted at Source) is a measure of collecting Tax under the Income Tax Act of India. Any payment that is covered under this provision is paid after deduction of a specific percentage. However, stabile investors would know that there is a provision to save on taxes on the interest received on investments above Rs 5,000 or 10,000.
This limit is increased to Rs 50,000 is the receiver is a senior citizen of India. To eliminate TDS, you have to submit declaration form no. 15G / 15H at the beginning of the financial year. If the total interest earned is less than the prescribed limit, you must submit the form no. 15G and for senior citizens, if the interest earned is less than Rs. 50,000, you must submit the form no. 15H.
Five Things to Know Before Submitting Forms 15G / 15H
Provide PAN Details
Although this prerequisite may vary among the financial providers, it is ideal to submit your PAN (Permanent Account Number) details. Some banks might deduct 20% (which is 10% when tax deduction is not filed) TDS even if you submitted the form no. 15G / 15H if you have not provided your PAN details.
File the form at The Beginning
As mentioned above, you must file the form no. 15G / 15H at the beginning of the financial year so as to avoid tax deduction even after filing the form. In case you file the form later, there are chances that your financial provider has already deducted the tax which has been paid to the Government of India. In such a situation, no refund will be done once the tax has been deducted. However, you can claim for Income Tax Return to get a refund.
Submit Forms in Duplicate
You need to submit these forms in duplicate which can sometimes be 3 copies. The lender will have to pay you the interest without tax deduction after the verification process.
Do Not Make False Claims
It is mandatory to provide true statements in the form for claiming tax deductions. If you provide any false information, you are punishable and are liable for prosecution under Section 277 of the Income Tax Act of India.
Make Sure to Meet the Eligibility Criteria
First, you need to be a residing citizen of India and secondly apart from the minimum interest received, the maximum income that can be exempted from taxation is Rs. 2.5 lakh. If your income from any investments exceeds this limit, you will not be liable for claiming tax deductions under the Indian Income tax Act.
Is Interest Earned from Fixed Deposit (FD) Taxable?
It is a widely acknowledged fact that Fixed Deposits (FDs) are one of the most reliable and secure investment vehicles from the rest. This is because of the guaranteed returns with flexible tenor and fixed interest rates you can receive with an FD account. However, the income received from an FD is not exempted from tax under the Income Tax Act of India. The tax deducted from FD income is similar to your gross income, i.e. it can be between 0% and 30%. But, you can claim for tax deductions by filing form no. 15G / 15H.
Indian citizens below the age of 60 years must fill form 15G and individuals who are above 60 years of age must fill form no. 15H. However, you must make sure to check with your financial provider that tax is not deducted before filing the form. Leading NBFCs like Bajaj Finserv provide you an online FD account where you can monitor your account as well as file tax deductions efficiently online.