TDS on fixed deposit interest: Time to submit Form 15G / 15H to your banker – Here’s why
For non-deduction of TDS on interest income received in a bank FD, qualified individuals should apply Form 15G or Form 15H to their banker. If you have a bank fixed deposit, double-check that your bank does not subtract tax from your interest income at source. If you are excluded from paying taxes, the bank would not make such a deduction. However, if you have bank fixed deposits with interest, If your income falls into the exempted slab and you raise more than Rs 40,000 in a financial year, the banker can cut tax at source.
The cap for senior citizens is Rs 50,000 in a single financial year. In the hands of the investor, bank FD interest income is fully taxable, and banks levy TDS, which can be adjusted when filing the income tax return. Interest earned on bank fixed deposits is subject to 10% TDS, but it can be deducted at 20% if a PAN is not given. If you are in the highest tax bracket of30%, simply paying TDS of 10% will not suffice.
Those who do not earn more than the exempted amount will tell the bank not to deduct TDS. Generally, this notification is provided to the banker at the start of the financial year by submitting Form 15G / Form 15H. Form 15H is for a person who is under the age of eighteen. Form 15G is for all those whose total income does not exceed the maximum amount that is not subject to income tax (senior citizens), while Form 15A is for all those whose total income does not exceed the maximum amount that is not subject to income tax.
If you had previously submitted certain forms for fixed deposits in the previous year, you would not be required to do so this year. This year, they’ll have to do it all over again. Only those with incomes below the exemption limit outlined in the Income Tax Act may apply such forms. Income of up to Rs 2.5 lakh is exempted for those under the age of60, while the income of more than Rs 2.5 lakh is exempted for those over 60.
Income up to Rs 3 lakh is tax-free for people over the age of 60 but under the age of 80. Furthermore, those over the age of 80 have no tax liability up to Rs 5 lakh. These individuals will request that their banker not subtract TDS on interest income received in a bank FD by submitting Form 15G / Form 15H.