Submit Form 15G or Form 15H to avoid TDS on your Interest Income
It is mandatory for financial institutions to deduct TDS (Tax Deducted at Source) on interest income on investments exceeding Rs.10,000, or Rs.5,000, if you have a company FD. This limit has been extended to Rs.50,000 for senior citizens. Typically, the financial institutions deduct this tax, and you can adjust is later when filing your income tax returns or paying your tax amount.
However, if you want to avoid TDS on your interest income entirely, you can submit Form 15G or Form 15H. However, remember that you can only avoid TDS by using these forms if your income is below the lowest tax bracket, or you have nil tax liability. In addition, you can use these forms only if you are an individual or an HUF (Hindu Undivided Family). You can’t claim these benefits if you own a company. For instance, as an individual looking to secure post-retirement life, you can choose a Fixed Deposit from Bajaj Finance and claim this benefit as long as you are eligible for it. Bajaj Finance is a good pick as it offers an interest of 8.40%, as well as an extra 0.35% on renewal, along with benefits such as a flexible tenor, doorstep document pickup and online investment management.
But before you invest, take a closer look at the two forms and identify the one that will help you to avoid TDS.
Choose Form 15G
Apart from interest income, Form 15G and 15H can be used for matters pertaining to rental income, insurance commission, and premature EPF withdrawals. But, remember that you must be below the age of 60 years to use Form 15G. Also, only individuals who are Indian residents are eligible to submit this forms. Your total interest income for the financial year should be less than Rs.2,50,000 and the tax payable should be nil to be able to submit this form.
Choosing Form 15H
To avail the benefits of Form 15H, you must be an Indian resident at least 60 years of age, that is, either a senior citizen or a super senior citizen. A total of Rs.3 lakh is the exemption limit for senior citizens, and Rs.5 lakh for super senior citizens. When your total income is less than the limit mentioned, you can submit Form 15H and ensure that your interest income is tax-free. For instance, if you are 65 years of age with a total annual income of Rs.2,70,000, including Rs.30,000 as interest income from fixed deposits, you can submit Form 15H to avoid TDS.
You must remember to submit this form to the financial institution where you have your FD at the start of the financial year to ensure that you avail the exemption benefits. If you fail to do so in a timely manner, you will have to pay the tax amount.
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