TDS interest income from fixed deposit: What you must know to avoid deduction of money - List of forms
Interest income from bank fixed deposits is considered as a taxable income, on which tax deducted at source (TDS) is applicable.
TDS on fixed deposits: Interest income from bank fixed deposits is considered as a taxable income, on which tax deducted at source (TDS) is applicable. If the income from a fixed deposit is more than Rs 10,000 in a given financial year (from April 1 to March 31), TDS will be deducted. Banks generally deduct 10 per cent TDS from the total interest amount only if it is above Rs 10,000 in a particular financial year.
However, if the total annual income of an individual is below the taxable limit, the person can avoid TDS deduction by submitting either Form 15G or Form 15H as applicable to the bank. Though it is important to note that the Income Tax department can ask for a penalty in case the assessee deliberately tries to avoid TDS in order to evade taxation.
Income Tax Form 15G and Form 15H:
Form 15G and 15H are self-declaration forms, under a prescribed format of the Income Tax Department, which allows one to declare that his/her income is below the taxable limit and hence exempt from income tax.
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The resident Indians under the age of 60, HUFs and trusts can submit the Form 15G, while resident Indians above 60 years of age are required to submit Form 15H to avoid TDS. However, in case the person above 60 years of age, earns an annual interest income up to Rs 50,000, the person shall be not required to submit For 15H as no bank will deduct TDS.
The TDS is applicable to both, bank fixed deposit interest or post office deposit interest or rental income. TDS can be avoided by submitting these forms to the relevant organisations like banks, post offices or tenants. These forms need to be submitted at the beginning of every financial year as these forms are valid for only one financial year.
However, in case an additional TDS is deducted on the interest income, the person can claim a refund while filing an income tax return for the given financial year.