TDS (Tax Deducted at Source) is the tax paid in advance by a person on incomes from sources like salary, business, capital gains, house property, etc. If the yearly interest is below Rs.5000/Rs.10000 the person is not liable to tax deduction at source. For senior citizens, the limit is Rs.50000. However, this tax deduction can be avoided by submitting form 15G and form 15H.
The Income Tax Act 1961 states that if the total taxable income is between INR 2.5 lakhs and INR 5 lakhs, it can be subjected to the tax rebate and the tax liability can be nullified. If the income is below INR 2.5 lakhs, you don’t have to pay tax anyway.
Points to Remember
- You should be an Indian citizen or belong to a Hindu Undivided Family. Your age should be less than 60(for form 15G) and above 60 (for 15H). There should be no tax liability. Total interest income below INR 2.5 lakhs ( threshold limit for the financial year 2021-2022) for form 15G and above INR 50000 for 15H.
- Some important components of form 15G which you should cross-check are the PAN number of the taxpayer, address and contact information of the taxpayer, details of the subject income (including nature and section under which it’s deductible), self-declaration stating the legitimacy of the information given, Unique Identification Number, address and contact details, PAN and TAN card numbers of the person/entity responsible for the Tax deduction, date of receiving the declaration, date on which the income has been paid or credited, amount of income paid.
- In the section which asks if you were evaluated for tax under The Income Tax Act 1961, write yes if your taxable income exceeded the threshold limit in any of the last six years and mention the year in the form.
- In the section which asks for the income subjected to TDS, aggregate all the incomes for which you are claiming exemption.
- Fill in the estimated aggregate income of last year in the required field.
- Specify the total number of 15G and 15H forms you are filling.
- Provide the aggregate income for which you’re applying for the tax rebate.
- Provide your signature in the end after the declaration is made.
- The form 15G and form 15H hold good for one financial year. Ideally, you should submit the form at the start of the financial year to inform the bank not to deduct tax from your income. If you delay the submission, the bank may have already deducted the tax before you submit. However, you can submit the form anytime before the end of the financial year. If the bank pays interest quarterly, if you don’t submit for a quarter, the bank will deduct tax.
- Please make sure to fill in the PAN number correctly. If you fail to do the same, the tax will directly be deducted at a 20% rate.
- Forms should be submitted in duplicate, one being directed to the IT department.
- If FDs are there in multiple branches of the same bank, forms have to be submitted in each of these banks separately.
- These forms apply only for payments like dividends, interests on securities and other interests, national saving schemes, interest on units, premature withdrawal from the provident fund, rent, insurance commission, payment in respect of life insurance policy, etc.
- Banks don’t deduct tax if interest is payable in a savings bank account.
- False declarations can attract penalties under section 277, liable to prosecution ranging from 3 months to 7 years. Don’t overstate your taxable income.
- Take the acknowledgment slip post submission to keep the record.
For further details, click to know more about form 15G
So, there are some rules which you must comply with while submitting the form 15G and form 15H. Take the precautions mentioned and follow the steps properly to not make any mistakes and face any further loss.