Last Updated on August 9, 2024 by Ali Hamza
Anyone who earns an income during a financial year is liable to pay taxes as per the Income Tax Act of 1961. There could be various sources of income such as income from salary, capital gains, business, rental properties, interests, and so on.
And in some cases, the concept of TDS comes into the picture. TDS or Tax Deducted on Source allows the entity which pays you the income to deduct the applicable taxes and submit it to the government. Once the applicable taxes are deducted, the paying entity would then pay the remaining amount to you.
The interest that you earn on your bank deposits is a good example of the same. For example, if you earn more than INR 40,000 for a financial year with the help of bank interests, the bank will deduct taxes at the source before paying the interest to you. For senior citizens, the limit is INR 50,000 before any TDS is deducted from their earned interests.
However, there is a clause that ensures that you do not have to pay taxes on the interest earned.
Form 15G
There is a possibility that your income might not be taxable, in such cases you can use the 15G Form to eliminate any TDS on the interest earned.
But before we get to the details of Form 15G, here are some details that will help you assess whether your income is taxable or not.
The Income Tax Act of 1961 defines how your income will be taxed but at the same time also outlines some of the relief that it offers. For starters, if your annual income does not exceed INR 2.5 Lakhs, you are not eligible to pay any taxes to the government.
Similarly, if you earn between INR 2.5 lakhs and INR 5 lakhs, you also do not have to pay any taxes on the amount. There are some tax rebates available that you can claim for your income between INR 2.5 lakhs and INR 5 lakhs. This essentially nullifies any taxes that you are supposed to pay. Also, there are a few incomes that are exempted from taxes by the Income Tax Act of 1961.
When you earn interest on your deposits, banks deduct taxes before handing out the interests. However, if you are not eligible to pay any taxes on your income, you can use Form 15G to eliminate any TDS.
Benefits of Filing Form 15G
Fixed deposit still remains one of the preferred choices of investment for a lot of individuals. Fixed deposits offer you a fixed return over a known period of time and their volatility is less than a normal savings account. Also, the returns are better as well.
The return on your investments is predictable in fixed deposits as well. Thus, it only makes sense to maximize your returns and consider the tax implications of investing in fixed deposits. People who deposit large amounts of money in Fixed Deposits are more likely to incur TDS. This is where Form 15G or Form 15H comes in handy.
Individuals who are not liable to pay any taxes for a financial year can use Form 15G to declare the same to their banks or financial institutions. This will ensure that if the interests exceed INR 40,000 for a financial year, the bank will not deduct any TDS.
The only difference between Form 15G and Form 15H is that the latter is for senior citizens. If you are a senior citizen, the interest threshold is INR 50,000. Should your earnings from interests exceed this, the banks will deduct TDS before paying you the remaining interest. Not if you submit Form 15H.
Thus, the biggest benefit of submitting Form 15G is that you can avoid the deduction of any taxes on your earnings from deposits.
There are a few things that you need to keep in mind while filing Form 15G or Form 15H.
- The age limit for filing Form 15G is up to 60 years while the minimum age required for filing Form 15H is 60 years.
- Both the forms have only one year of validity. You need to submit a form every year if you wish to waive TDS on your interests.
- If you have multiple accounts in different branches, you will need to submit separate forms for each branch.
- You need to submit your PAN details along with the declaration form to the bank or financial institution. It is a mandatory step, and you need to do this regardless of your income tax status.
- You can use Form 15G and 15H for payments or income in the form of dividends, interest on securities, interest on bank or company deposits, or interest on NSS units. No other form of income qualifies for these forms.
Form 15G and 15H can help you in eliminating any TDS that is deducted from your interest-earning. Keeping the above points will help you save money while following the correct procedures.
Apart from that, if you want to know about Five Top Rated Series On Netflix Then please visit our Entertainment category
