ITR filing: Any one having a bank account earns some interest on their deposits and this particular income is taxable. Anyone earning an interest income from their bank accounts must know that tax is to be deducted at the time of payment or credit of interest (to any account by whatever name called), whichever is earlier, as per section 194A.
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The provisions of tax deducted at source (TDS) presently apply to several payments like salary, interest, commission, brokerage, professional fees, royalty, etc. However, no tax is required to be deducted if aggregate amount of interest credited or paid to the payee in respect of time deposit during the financial year doesn’t exceed RS 40,000. The threshold is Rs 50,000 for senior citizens.
Avoiding TDS on Interest Income
A major respite that taxpayers are eligible for is that if their annual taxable income is less than the tax exemption threshold, they can avoid TDS on incomes such as interest and rent by submitting form 15G or 15H to the appropriate person or organisation.
Forms 15G and 15H come into play when a taxpayer’s interest income in under the limit and want to avoid paying TDS. People under 60 are required to submit Form 15G while those above 60 years of age are needed to submit Form 15H.
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Submission of Form 15G/15H
The taxpayer who receives declaration in Form No 15G/15H shall be required to upload details of such declarations on quarterly basis on the e-filing site (www.incometax.gov.in) under his digital signature within:
– 15 days from the end of first, second and third quarter
– 30 days from the end of fourth quarter.
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Important Points to Note
– Declaration in Form No. 15G/15H can be made only by an individual resident in India.
– Declaration in Form No. 15G/15H can be made, if the annual interest does not exceed the exemption limit (i.e. Rs 2,50,000 or Rs 3,00,000 or Rs 5,00,000, as the case may be).
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This condition is not applicable in case of a senior citizen 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 tax payable on total income of the year should be “Nil”.
