When the interest income on fixed deposits is more than the prescribed limit, then TDS is deducted from it. To avoid this, you are advised to fill a form while getting FD done.
If you are one of those investors who make FD their priority, then you must understand one thing before getting FD done. Actually, the income from FD with tenure less than 5 years is considered taxable. When the interest income on fixed deposits is more than the prescribed limit, then TDS is deducted from it.
Therefore, to avoid this, you are advised to fill a form while getting FD done. Understand about these forms here, so that if you are planning to get FD done, then you can prevent TDS deduction by filling these forms in the beginning itself. Understand who needs to fill these forms and when is TDS deducted?
When is TDS deducted?
According to the rule, if the income earned through interest on FD is more than Rs 40,000 per annum, then TDS is deducted. For senior citizens, this limit is Rs 50,000. This TDS is added to the total income of the person and after this income tax is imposed on it according to the slab. But if this income of a person is less than the taxable limit, then he has to fill Form 15G and 15H and submit it to the bank and request not to deduct TDS.
Who fills Form 15G
By filling Form 15G and Form 15H, the person tells the bank that his income does not come under the purview of tax. Form 15G can be filled by any person below 60 years of age, Hindu Undivided Family. Form 15G is a declaration form under sub-section 1 and 1(A) under section 197A of the Income Tax Act, 1961. Through this, the bank gets to know about your annual income. If your income does not fall under the tax bracket, then the bank does not deduct TDS on FD. If you do not fall under the tax bracket, then you can fill this form.
For whom is Form 15H useful
Form 15H is for people aged 60 years or above. By submitting it, senior citizens can stop the TDS deducted on FD interest. But this form is submitted only by those whose taxable income is zero. The form has to be submitted in the bank branch from where the money is being deposited. If the interest income from any source other than deposits such as interest income on loans, advances, debentures, bonds etc. is more than Rs 5,000, then Form 15H has to be submitted.
Form 15H should be submitted before the first interest is paid. Although it is not mandatory. But if you do this, then TDS deduction from the bank can be stopped from the very beginning. If a customer misses to fill these forms, then he can claim TDS in the assessment year in the income tax return. In such a case, a refund will be received from the Income Tax Department.
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