If you have a fixed deposit with a bank, post office or a non-banking financial company (NBFC), make sure to submit Form 15G and/or Form 15H as the case may be at the start of the new financial year on April 1, 2024, to prevent tax deduction at source (TDS) on your fixed deposits (FDs).
Fixed deposits, whether they are made with the bank, post offices, or with non-banking financial companies (NBFCs) attract TDS under the income tax regulations. Under section 194A of Income-tax Act, 1961, TDS is deducted at the time of payment or credit of interest into the account.
Under the Income-tax Act, 1961, the exemption limit for TDS deduction on FDs is currently Rs. 40,000 for general citizens and Rs. 50,000 for senior citizens.
To prevent TDS deductions, individuals below the taxable limit can submit Form 15G (for those under 60 years) or Form 15H (for senior citizens) to their bank. These forms declare that the individual’s income falls below the taxable limit. However, they must be submitted at the start of the financial year.
Let’s say for instance an individual has a fixed deposit at X Bank and earns an annual interest of Rs 50,000. In this case, since the annual interest exceeds Rs. 40,000, the bank will deduct TDS on the entire interest amount of Rs 50,000. According to existing income tax rules, if the depositor has not provided his/her Permanent Account Number (PAN) with the bank, then TDS on the FD interest will be charged at 20 per cent.
Both these forms are applicable for residents whose taxes sum up to zero as they are within the basic exemption limit.
According to the income tax department, the declaration in Form No. 15G/15H can be made if the annual interest does not exceed the exemption limit (i.e., Rs. 2.50 lakh, Rs. 3 lakh or Rs. 5 lakh, as the case may be).
“However, this condition is not applicable in case of a senior citizen (i.e., resident individual of at least 60 years of age) i.e,. a resident senior citizen can furnish declaration in form 15H even if annual interest likely to be paid to him exceeds the exemption limit of Rs. 2,50,000 or Rs. 5,00,000, as the case may be, provided the tax payable on his total income after considering the rebate under section 87A is nil,” the I-T department says.
Notably, these forms should be submitted at the beginning of the financial year. The next financial year starts on April 1, 2024.
Depositors can submit the forms online. To submit either of these forms, individuals can visit the official website of the bank, log in, and navigate to the ‘e-Services’ section.
There, they will have to provide the CIF number, provide personal details, including PAN, address, etc. Then, they will have to press confirm and enter the OTP sent to their registered mobile number.
It is advisable that depositors keep a note of the UIN generated after submission for future reference.
If one has missed filing Form 15G or Form 15H, one can claim refunds when filing his/her income tax return (ITR). The TDS deductions would be reflected in Form 26AS, and the same will be taken into consideration and adjusted against the individual’s total tax liability for the financial year.
