Fixed deposits are a form of investment in India which allows taxpayers to benefit from the Section 80C, if invested for 5 years in a special tax-saver scheme. FDs are also regarded as one of the most secure investment schemes in 2020 for its guaranteed return and added benefits.
As per the guidelines of the Income Tax Department of India, the annual interest income from a fixed deposit is taxable if it exceeds the tax exemption limit. However, if your interest from such a savings account is below the tax slab, you are required to opt for Form 15G H download and submit it to your financial institution to avoid TDS.
What is TDS?
Your income from fixed deposits is taxable and is mentioned under the ‘Income from Other Sources’ section in your income tax return certificate.
This amount is deducted by your financial institution when the interest is credited to your fixed deposit account. Since the deduction takes place at the origin, it is also referred to as TDS or Tax Deducted at Source.
When is tax deducted on fixed deposits?
The annual interest earned from your fixed deposit is taxed as per the following conditions laid by the Government of India –
- According to Budget 2020, if you are under the old tax regime and your annual interest income from all your fixed deposit accounts is under Rs.40,000, you are not applicable for TDS.
- If your annual interest income from all your FDs exceed Rs.40,000, financial institutions are required to deduct 10% TDS.
- If your earnings from FD interests exceed Rs.40,000, but your total annual income from all sources is below the tax exemption limit of Rs.5 lakh, then financial institutions are no required to deduct any TDS.
What is Form 15G & 15H?
Account-holders whose annual interest income from fixed deposits is below the tax exemption limit of Rs.40,000 are required to inform their financial institution not to deduct any tax. The official document through which a financial institution accepts your request is known as Form 15G.
Account-holders who are 60 years of age or above are required to submit Form 15H to the financial institution for a similar purpose. The exemption limit is Rs.50,000 in their cases. Individuals can opt for the online application process of these forms or go for the manual Form 15G H download option and submit the forms by visiting the nearest branch of their financial institution.
Eligibility criteria to submit Form 15G or 15H
The following conditions have to be met in order to submit the above forms to your financial institution –
- For Form 15G
- Individuals, associations, trust are eligible.
- Companies or firms are not eligible.
- Only Indian residents can apply for Form 15G
- Account-holders under the age of 60 are applicable for Form 15G.
- Amount of tax calculated on your total annual income is nil.
- For Form 15H
- The fixed deposit account holder must be a resident of India and an individual, trust or association and not a business, company or firm.
- A senior citizen or above the age of 60 must submit this form.
- As per your overall annual income, the amount of tax payable is nil.
Where to opt for Form 15G H download from?
CBDT or the Central Board of Direct Taxes has introduced a digital process to submit Form 15G or Form 15H. Account-holders are required to visit the official website of their financial institution and fill in the forms or opt for a Form 15G H download and upload the required documents for submission.
As per the CBDT, a tax deductor is supposed to provide a Unique Identification Number for each Form 15G and Form 15H issued. Tax deductors or financial institutions are required to send all the details of an account holder’s self-declaration along with the UIN to the Income Tax Department of India.
Hence, from this above discussion, you can understand the benefits of Form 15G or 15H for fixed deposits. Account-holders should keep in mind that these forms are valid for one financial year only and needs re-submitting for the next financial year.
When opting for an FD, investors can opt for those offered by NBFCs like Bajaj Finance. The company offers the best FD interest rates in the country, which helps to generate a substantial corpus over time.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory