Fixed Deposits (FDs) are a popular investment option for individuals looking to earn a steady income while keeping their funds relatively safe. However, one aspect that often catches investors off-guard is the deduction of Tax Deducted at Source (TDS) on the interest earned from FDs. Fortunately, there’s a way to avoid or reduce this TDS liability using Form 15G and 15H. In this blog, we will delve into what Form 15G and 15H are, who can use them, and how they can help you save on TDS for your FD interest.
Understanding Form 15G and Form 15H:
Form 15G and Form 15H are self-declaration forms that can be submitted to the bank or financial institution to prevent the deduction of TDS on interest income, provided certain conditions are met. These forms are particularly beneficial for individuals whose total income falls below the taxable limit, and they want to prevent TDS from being deducted unnecessarily.
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Form 15G: This form is meant for individuals below the age of 60. To be eligible to submit Form 15G, the following conditions must be met:
- The individual’s age should be below 60 years.
- The total estimated income for the financial year, including the interest on FDs, should be below the minimum taxable limit.
- The total interest income should not exceed the basic exemption limit.
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Form 15H: This form is designed for senior citizens, i.e., individuals aged 60 years or above. The conditions for submitting Form 15H are as follows:
- The individual should be 60 years or older.
- The estimated total income for the financial year, including FD interest, should be below the minimum taxable limit.
- The total interest income should not exceed the basic exemption limit.
Steps to Save TDS Using Form 15G and 15H:
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Determine Eligibility: Before you decide to submit Form 15G or 15H, calculate your estimated total income for the financial year. Ensure that your income falls below the taxable limit, and your interest income is within the exemption limit.
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Obtain the Relevant Form: You can obtain Form 15G and Form 15H from the bank where you hold your FD or download it from the bank’s official website.
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Fill Out the Form: Provide accurate and complete details in the form, including your personal information, PAN (Permanent Account Number), estimated total income, and FD details.
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Submit the Form: Once you’ve filled out the form, submit it to your bank or financial institution. Ensure that you keep a copy of the submitted form for your records.
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Validity Period: Form 15G and 15H are valid for one financial year. You need to submit a fresh form at the beginning of each financial year if you meet the eligibility criteria.
Benefits of Using Form 15G and 15H:
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Higher Interest Earnings: By preventing TDS deduction, you can receive the full interest amount on your FD, leading to higher earnings.
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Reduced Hassle: Avoid the inconvenience of reclaiming TDS from the income tax department by using these forms.
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Liquidity: Retaining the entire interest amount can provide you with greater liquidity, especially if you rely on interest income for your expenses.
Conclusion:
Form 15G and Form 15H are valuable tools that allow eligible individuals to save on TDS and maximize their FD interest earnings. By understanding the eligibility criteria, correctly filling out the forms, and submitting them to your bank, you can ensure that your hard-earned money is not unnecessarily deducted as TDS. Always stay informed about any changes in tax regulations and consult with a financial advisor if you have any doubts regarding the submission of these forms.
