Income Tax Update: Know from experts the measures and rules to avoid TDS deduction on interest income
New Delhi. In banks, interest income up to Rs 40,000 (Rs 50,000 for senior citizens) is exempted from TDS. Deduction is not applicable for filing of Form 15G and 15S in case of interest income above this.
It is very simple but sometimes due to wrong information, you can come in the eyes of Income Tax officials. Therefore, News18 has spoken to the experts of Income Tax to know the answers to the questions related to TDS. Understand the ABCD of TDS from our expert Chartered Accountants Vikas Agarwal and Harigopal Patidar through easy language and question-answer…
What is TDS?
According to the Income Tax Act, the government levies income tax if the income exceeds a certain limit. This tax has to be deposited by the person concerned himself. But in some cases, the government has put the responsibility of collecting tax at source itself. For example, interest income on FDs. Banks deduct tax on this income and deposit it in income tax.
What are Form 15G and 15H?
Under the Income Tax Act, the taxpayer is entitled to receive certain types of income (such as interest, dividend, rent, insurance commission etc.) without deduction of tax at source (TDS). Suppose your interest income is Rs 60 thousand and income from other sources is zero or one lakh rupees. That is, your total income is less than the income tax limit. Still, banks will deduct tax by following TDS rule. Therefore, the government has given the facility of Form 15G and 15H for such people whose total income is less than the taxable limit. Form 15G is used for Hindu Undivided Families and 15H Senior Citizens below 60 years of age. Banks do not deduct TDS after submitting this form.
Is it necessary to have PAN for Form 15G and 15H?
In order to avoid TDS deduction, both Form 15G and 15S can be operated on Aadhaar even if there is no PAN number for filing the declaration. However, while filing the affidavit in Form 15G and 15H, care should be taken to mention valid PAN. If the PAN is invalid, then the affidavit will also be treated as invalid.
When should I submit this form?
Each organization deducting TDS has to submit this form separately. That is, whoever deducts your TDS, has to submit this form to him. If there are repeated payments from the same deducting entity (such as bank deposits from the same bank or quarterly interest on multiple types of deposits), the taxpayer can declare in Form 15G or 15H at the beginning of the financial year itself. After this, whenever there is a change in the estimated total income of the taxpayer, then he has to file this form.
When will the forms be submitted this year?
The last date for filing personal income tax return (ITR) for the financial year 2020-21 is now December 31, 2021. Whereas, the last date for Form 15G and 15H is now 30 November, 2021.
Does this form have to be filled every year?
These forms are valid for one financial year only. That is why if TDS deduction is to be saved from income, then these forms have to be submitted at the beginning of every financial year. These forms can be submitted at any time of the year but it is advisable to do so before the income comes into the account for the first time.
What if the form is not submitted within the stipulated time?
In case of non-submission of the form, TDS will be deducted from the taxpayer at the prescribed rate. If TDS is deducted, the taxpayer can do two things. If the taxpayer is not able to submit this form in the first quarter, then he should do so as soon as he gets the first opportunity so that no further tax deduction is made during that financial year. He can later claim TDS refund while filing the tax return.
Do I have to give information about the gross income of the previous year also?
Yes. Therefore, the information required to fill the form should also be always ready. You will also need to state your total estimated income for the financial year for which you are filing the affidavit. It will also have to state the amount of income for which you are filing the affidavit. You will also have to specify how many such forms you are submitting. Along with this, the information about the gross income amount for which the forms were submitted in the previous year will also have to be given.
Will the bank interest in any one account be less than 40 thousand rupees even then the form has to be filled?
Whether there are different accounts in the same bank or multiple accounts in many banks, if the total interest income is less than Rs. But if the total interest income in the accounts of all banks is more than 40 thousand rupees, then Form 15G and 15H should be given in each bank.
What if there is a mistake in the affidavit?
If you give a wrong affidavit to save TDS, then the Assessing Officer can investigate you further. You also have to ensure that the forms are submitted in all the branches of banks where you get interest income. Yes, TDS will be deducted only when the interest on all branches exceeds the prescribed limit.
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