TDS stands for tax deducted at source. A certain amount of tax must be deducted and filed with the government on the recipient's behalf from a payment made to the recipient.
In India, taxes are collected in this manner. Tax is deducted at the time of payment, and any residual money is given to the beneficiary.
Payroll, interest on fixed deposits, rent, professional fees, and other types of payments are all subject to TDS. The Income Tax Act's provisions and the payment type each impact the TDS rate.
TDS helps the government ensure a consistent flow of revenue while reducing the incidence of tax evasion.TDS functions as an advance tax payment for beneficiaries and can be claimed as a credit on their income tax returns.
What is FORM 15G?
People under the age of 60 and HUFs with fixed deposits can use Form 15G to ensure that no TDS is deducted from their interest income for the fiscal year. Section 197A of the Income Tax Act of 1961 makes Form 15G available.
You can give the bank your annual income information on Form 15G and ask them to stop deducting TDS from your interest income.
The process to fill the Form 15G
Following are the steps to submit Form 15G to avoid TDS on interest income:
- Check Eligibility: Individuals under the age of 60 who have a total annual income (including interest income) less than the taxable threshold must file Form 15G. Before submitting the form, double-check that you meet all of the conditions.
- Obtain the form: You can receive Form 15G from the bank or financial institution where you have your fixed deposit or other investments and via the Income Tax Department website.
- Fill in the details: Give the necessary information, including your name, address, PAN, and other pertinent information. Declare that you are not required to pay any taxes because your income is below the tax threshold.
- Submit the form: After you have completed the paperwork, you should send it to the bank or other financial institution where you have your fixed deposit or other investments.
- Verify the acceptance: Make sure the bank or other financial institution has accepted the form and will not deduct TDS from your interest payments.
Important features of Form 15G
- Form 15G can be submitted by trusts, HUFs, and individual taxpayers under the age of 60.
- You need to submit Form 15G before the bank starts paying interest.
- Every branch and bank where you have an interest-bearing deposit must receive the form.
- When your taxable income does not result in a tax liability for the financial year, you are eligible to submit the form.
- Only local Indians have access to the facility.
- You should not have an annual total interest income that exceeds the minimum taxable income of Rs. 2.5 lakhs.
What is Form 15H?
Senior citizens 60 years of age and older may use Form 15H, a self-declaration form, to avoid paying TDS on interest earned on fixed deposits (FDs) and recurring deposits (RDs).
Form 15H can be found in Section 197A, Subsection 1C of the Income Tax Act of 1961. This statement now makes the full interest on your deposits payable to you without any tax deductions.
The process to fill the Form 15H
Following are the steps to submit Form 15H in order to avoid TDS (Tax Deducted at Source) on interest income:
- Eligibility: Before submitting Form 15H, ascertain your eligibility. Seniors 60 years of age or over whose annual income (including interest income) is below the taxable threshold are eligible to use this form.
- Obtain the Form: You can get Form 15H from the bank or other financial institution where you have an account. The Income Tax Department's website also offers a download for the form.
- Fill in the Details: Specify your name, address, PAN, bank account information, and any fixed deposits or savings plans you may have.
- Declaration: Declare that because your yearly income (including interest income) is below the taxable limit, you are not required to pay tax. Declare further that the total amount of interest income received for the fiscal year does not exceed the basic exemption level.
- Signature: The bank or other financial institution where you have your account should get your signed form.
- Verification: If the information supplied in the form is confirmed to be accurate, the bank or financial institution will not withhold TDS from your interest income.
Important Features of Form 15H
- If you are at least 60 years old, you may submit Form 15H.
- Your taxable income for the fiscal year cannot exceed the maximum exempt amount of Rs. 3 lakhs or Rs. 5 lakhs if you are over the age of 80.
- You must turn in the form at each bank branch where you made a deposit.
- Ideally, you ought to send the form and deposits together. This will enable you to receive your money back without having to wait for ITR processing.
- Form 15H is required for
The bank account on which you have an annual interest rate of more than Rs 10,000. If the interest from your bonds and debentures investments in the most recent fiscal year was more than Rs 5000.
What Should You Do If You Forget to Submit Forms 15G & 15?
Form 15G and 15H submissions must be done yearly. Thus, it's simple to forget.
You shouldn't be concerned if the bank has already deducted TDS as a result of the submission delay. To reduce the TDS flow and restore the amounts, take the following routes:
1. Submit Form 15G/15H Immediately
The initial step is to send Form 15G or 15H as soon as you can. There won't be any further deductions as a result. Additionally, you typically have up to 90 days after the start of the new fiscal year to submit the form. If you missed this deadline, send it in by the end of the following quarter. Banks typically charge credit interest every three months. Therefore, you can still avoid paying TDS on future interest bills.
2. File your Income Tax Return
You can provide an accurate estimate of your taxable income and rebates when you file an ITR. Your Form 26AS contains information on the TDS deductions from the prior year. This sum should include any TDS the banks deducted from the interest they paid you. This sum will be deducted from your overall tax obligation for the fiscal year. Your tax obligation would have been zero if you had qualified for Form 15G or 15H. The TDS amount (as shown on Form 26AS) must thus be paid back to you.
Form 15G or Form 15H is a way for individuals to declare that their income is below the taxable limit and request the bank or financial institution not to deduct TDS on their interest income.
However, it is important to note that filing these forms does not exempt a person from paying income tax if their income exceeds the taxable threshold.
Ultimately, it is the responsibility of the individual taxpayer to pay taxes on their income and file income tax returns accordingly.
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FAQs related to Form 15G form 15H TO SAVE TDS ON INTEREST INCOME
1. Should I submit Forms 15G and 15H as an NRI?
You cannot submit Forms 15G and 15H for TDS deductions if you are an NRI. Only Indian residents are eligible to use these Forms. Additionally, a TDS deduction is required when paying NRIs' income.
2. Will the filing of Form 15G/Form 15H mean that interest income is not taxable?
Filling Forms 15G and 15H simply states that your taxable income for the prior year is expected to be less than the exempt amount. You will have to pay tax on it regardless if your real total taxable income exceeds this limit. This includes the taxable portion of interest income as well as interest that exceeds the exempt limit of Rs 10,000.
3. Should I submit Form 15G/Form 15H to all branches of my bank?
Yes, at each bank branch where you have a deposit, you must submit Form 15G or 15H. Additionally, you can deliver Form 15H to the Post Office location where your Senior Citizen Savings Scheme (SCSS) account is located. TDS will be applied to SCSS interest payments that are greater than Rs 50,000 annually.
4. What happens if I filed Form 15G/Form 15H but have taxable income?
Suppose you have taxable income and have filed Form 15G or 15H. At the end of the fiscal year, you will be responsible for paying taxes on your total income. This tax obligation will also include interest income tax. You must also pay at least 100% of your total advance tax liability by March 15th.
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