31st March is a nightmare to most taxpayers. It is that time of the year, when you only think of ways to save tax. Many times, you may end up paying tax in the form of TDS, despite not falling under any tax brackets. You may not be aware that you can save TDS on interest income.
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Submit Form 15G and Form 15H and Save Tax
Whether you are an aggressive investor (who assumes a greater degree of risk) or a conservative investor (who prefers to be on the safer side), you must surely have some deposits in a bank through savings account, recurring deposits, fixed deposits on which you earn interest. This income is called income from interest or interest income.
Your Bank deducts TDS on your interest income, if it exceeds Rs 10,000 a year. This is calculated by taking into account your deposits held across all its branches. You would obviously not want to pay tax on your deposits, if your income is below the basic exemption limit and there’s actually a way out. All you need to do is submit Form 15G and 15H to the bank, requesting them not to deduct any TDS on your interest income.
SEE ALSO: Everything About TDS
2. What are forms 15G and 15H?
Form 15G and Form 15H are self-declaration forms, which you submit to your bank to request them not to deduct TDS on your interest income. You can submit these forms either online (through a bank’s website) or offline (submitting to your bank in person).
3. Conditions to submit Forms 15G and Form 15H
There are certain conditions you need to fulfill to be eligible to submit these forms:
SEE ALSO: How To Avoid TDS On Interest Income?
The ideal time to submit these forms is at the beginning of a financial year. If you forget to submit these Forms in time, your banker will already have deducted TDS. Do not fret, you can:
Your banker deducts TDS each quarter. So, don’t worry and submit the forms at the earliest.
You might ask what about the TDS deducted so far. The only way out is to claim a refund, for which you will have to file Income Tax Returns. Income Tax Department, in turn, will refund the excess TDS.
5. Other uses of Form 15G and 15H
Other than submitting Form 15G and Form 15H to avoid deduction of TDS on interest, you can also submit them in the following cases: (Note: The eligibility conditions to submit Form 15G and Form 15H as mentioned above continue to apply below)
1. EPF Withdrawal Tax
Withdrawal of EPF balance of more than Rs 50,000 before 5 years of continuous service attracts TDS.
2. Income from corporate bonds
TDS is deductible on corporate bonds if interest so earned exceeds Rs 5,000 in a financial year.
3. TDS on post office deposits
Digitized post offices also deduct TDS on deposits.
4. Income Tax on Insurance Commission
TDS is deducted from insurance commission exceeding Rs 15,000 each financial year. An insurance agent has to submit Form 15G and Form 15H so that TDS will not be deducted. Be Wise, Get Rich.
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