According to the terms stipulated by the Indian Income Tax Act, if your interest income from investments such as company fixed deposits or other term deposits exceeds Rs.5,000 or Rs.10,000, respectively, then the financial institution is allowed to deduct 10% of the amount as TDS or Tax Deducted at Source. For senior citizens, the bracket is higher, and interest income of up to Rs.50,000 is exempt. You can avail this exemption only if you are an Indian resident, and are an individual or HUF. However, in order to avail the exemption benefits you need to abide by certain laws and mandates.
It is essential to remember that misusing this benefit by making a false declaration will attract penalty as per the Income Tax Act. You can face anywhere from three months to two years imprisonment, and will have to pay a hefty fine too. So, ensure that you understand Form 15G and Form 15H and only submit them if you are eligible.
Take a look at how to make proper use of the benefits of Form 15G or 15H.
- Understand the Eligibility Criteria
The foremost condition to submit Form 15G or 15H is to ensure that your tax on total income, including interest, is nil. Besides, the interest income must be less than Rs.2.5 lakh if you are under the age of 60 years, less than Rs.3 lakh if you are a senior citizen over the age of 60 years, and less than Rs.5 lakh if you are a super senior citizen over the age of 80 years. You must be below 60 years of age to submit Form 15G and if you are a senior, or super senior citizen, be sure to submit Form 15H.
- Understand the form Submission Technique
While filling the form, you must ensure that you enter all the details accurately. Also, double-check your PAN before submitting the form to ensure it is entered correctly. Be sure to submit the form at the beginning of each year to accrue the benefit offered by the Income Tax Act, and, remember that you will need to submit fresh forms each year. If after submitting the form your income exceeds the estimated amount, you need to withdraw the form and mention the correct particulars. Moreover, you will also have to specify the reason behind such a change.
With this information on hand, make sure that you use Form 15G and Form 15H appropriately. Submit them in a timely manner to avoid TDS, but only after you check your eligibility.
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