Form 15G & Form 15H: Fixed deposits are often the preferred investment avenue for most Indians. FDs offer substantial returns with much lower volatility as compared to other investment options.
When one signs up for a fixed deposit, it is crucial to be aware of the tax exemptions. Interest earned on fixed deposits are subject to TDS (tax deduction at source). Form 15G and H download can help investors avail the applicable tax exemptions as per the IT act.
What is Form 15G and Form 15H?
Financial institutions and NBFCs are instructed to deduct TDS as per Section 19 (4A) of the Income Tax Act of 1961, on all interest payments exceeding Rs. 10,000 in a financial year. This denotes that any fixed deposit holder who is generating interest income of more than Rs. 10,000 will be taxed on the same. The financer offering the FD will deduct TDS from the maturity value on behalf of the Income Tax Department.
Section 19 (4A) also mentions that individuals who were receiving interest amount exceeding Rs. 10,000 from their FD or RD accounts and are below the taxable income threshold will also be taxed. The benefits of Form 15G and H in case of fixed deposits are meant for eligible individuals to avail lower or no deduction of TDS.
Now, although both of these forms fulfil the same purpose, they possess subtle differences. Form 15G is for individuals who are below 60 years of age. These forms cannot be submitted by Non-resident Indians and companies. Those who can include individual bodies, trusts, and HUFs (Hindu Undivided Families).
If you wonder what is Form 15H, then know that it is meant for senior citizens above 60 years of age. Another prerequisite to submit Form 15G and 15H is that the final tax on the total estimated income must be nil for the current financial year. Now, that you know of TDS on Fixed Deposit interests, submit the relevant forms to claim tax benefits.
When to submit Form 15G and 15H to avoid TDS?
Both Form 15G and H download come with one-year validity and must be submitted to the financial agencies at the start of a fiscal year. You need to submit these forms at the beginning of a financial year to avoid a situation where the financer has already deducted the tax.
This is a crucial part because if the financial institution has deducted and deposited the tax already with the Income Tax Department, then they will not be able to refund the amount.
Since both forms are valid for only a year, go ahead with a Form 15G and H download again and submit them in the following financial year to achieve nil or lowered TDS. This due diligence ensures that an account holder can achieve maximum-assured returns on his/her fixed deposit.
Additionally, if you are considering opening an FD account, you can consider it from Bajaj Finance that offers up to 8.85% interest rate on fixed deposits.
Things to keep in mind when declaring Form 15G and 15H
- Being aware of what is Form 15H and 15G is used for, an individual must submit these forms along with valid PAN. Failing this can incur tax deduction of up to 20%.
- If you are claiming tax benefits under Section 80C, make sure that the interest from all your investments is less than Rs. 1.5 Lakh.
- Make sure you claim the tax deductions at the appropriate time. For instance, with SCSS (Senior Citizen Savings Scheme), you can only claim tax exemptions in the financial year you sign up. You cannot claim an exemption during renewal or withdrawal of the sum.