If the interest income on fixed deposits is more than the prescribed limit, then the banks deduct TDS from it. But if you want, you can stop the TDS deduction. Two types of forms are used for this. Know when and how they are used.
Income Tax Rule on FD: In today’s time, there are many investment options, but still people have a lot of faith in Fixed Deposit. FD is definitely included in the portfolio of most people even today. The reason for this is that FD is considered a secure investment. Also, investors get guaranteed returns on it. But income tax is levied on the income from FD. If the interest income on fixed deposits is more than the prescribed limit, then the banks deduct TDS from it. But if you want, you can stop the TDS deduction. Two types of forms are used for this, Form 15G and 15H. Know when and how these forms are used.
First know when TDS is 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, tax is levied on it according to the tax slab. But if this income of a person is less than the taxable limit, then they have to fill Form 15G and 15H and submit it to the bank and request not to deduct TDS.
Know what is 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.
What is Form 15H
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 all the bank branches 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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