Utilize Form 15G and Form 15H to Maximize Earnings from FDs: The Fixed Deposit (FD) is a popular investment option in India. It is a guaranteed return investment scheme where one can invest their money for a certain period and get a return when the scheme is completed.
FDs can have a duration of one, two, three, five, or ten years. There is no income tax rebate for FDs with a duration of one, two, and three years, but deposits in FDs with a duration of five years or more receive an exemption up to Rs 1.50 lakh under Section 80C.
If the interest earned in a FD exceeds the prescribed limit, it is taxed under TDS.
When starting an FD, Form 15H and Form 15G must be filled out in order to avoid this.
Learn how Form 15G and Form 15H can help you save income tax on FD earnings and how TDS is deducted-
Utilize Form 15G and Form 15H to Maximize Earnings from FDs: How and when is TDS deducted?
TDS is deducted from interest on FDs if the income exceeds Rs 40,000 annually.
In the same case, the limit for senior citizens is Rs 50,000.
TDS is added to the total income of the person and then he is taxed accordingly.
Form 15G and 15H must be filled out and submitted to the bank to request not to deduct TDS if a person’s income is less than the taxable limit.
Are you familiar with Form 15G?
By submitting Form 15G and Form 15H, an FD holder informs the bank that their income is not taxed.
Anyone under 60 years of age belonging to a Hindu Undivided Family may fill out Form 15G.
In accordance with Section 197A of the Income Tax Act, 1961, Form 15G is a declaration form.
A person’s annual income is determined by this process.
TDS is not deducted from your FD earnings if your income does not fall within the tax ambit.
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How does Form 15H work?
A Form 15H is similar to Form 15G, but it is for FD account holders over 60 years of age.
Senior citizens can stop TDS deduction from their FD interest earnings by depositing this to their bank.
This form is only available to senior citizens with zero taxable income.
Each bank branch where the money is deposited must submit the form.
A Form 15H must be filed if interest income from sources other than deposits exceeds Rs 5,000, such as loans, advances, debentures, bonds, etc.
Before the first interest payment is made, Form 15H must be submitted. This is not a requirement.
If you do this, TDS deductions from the bank can be stopped from the beginning.
In such a case, you will get a refund from the Income Tax Department if the customer fails to fill out the forms.
