A significant number of individuals, the majority of whom have incomes that are not subject to the tax bracket, have predominantly invested in commodities, including such FD via which they can receive interest. If, however, our overall income is exempt from taxation, is there anything we can really do to ensure that the bank just wouldn’t take TDS on any interest which you garner?
Allow me to emphasize, in case none of you are aware of this already, that it is required by law for banks to withhold TDS from the investment earnings we get. If your income is not taxable, and unless we also collect interest from other investment instruments, etc., then we’ll need to give Form 15G and Form 15H to a bank. This banking institution does not take TDS from our interest earnings because your income isn’t really subject to taxation.
1. Save TDS
TDS is an abbreviation that stands for “tax deducted at source.” If an individual’s annual interest income amounts to more than Rs. 40,000, then the law requires banks to charge TDS from that individual’s interest earnings. Before determining the amount of interest you earn annually, the bank will first total up all of the money deposited in your name across all of their locations. Therefore, the TDS is deductible in this scenario if the interest is greater than the minimum limit on taxable income.
If, on the other hand, your overall annual income, which must include interest generated from savings, will be less than the total annual threshold, you can contact your bank to request relief or exemption from TDS by completing Form 15G. This would allow you to avoid paying tax on the interest gained from deposit accounts. Form 15H needs to be submitted by senior citizens.
2. Withdrawal of a sum from the EPF in the first five years
If you make withdrawals from your EPF account before you have worked for a total of five years and a lot you have in your EPF account is greater than 50,000 rupees, there is indeed a provision that says the tax will be withheld from it. You have the option of submitting Form 15G in this scenario as well, which will prohibit the bank from making TDS on the transaction. Be aware that your total yearly income, comprising EPF amount, cannot be more than Rs. 2.5 lakh if you want to avoid having tax deductions taken from it by the bank.
3. Senior citizen
If you have got a bank fixed deposit, now is the time to verify that your financial institution is not deducting tax just at source from the investment earnings that are received. In the event that you are exempt from paying taxes, the bank would not make any deductions of this kind. However, if you have bank fixed deposits and the interest received on those accounts seems to be more than Rs 40,000 in such a financial year, the banker would deduct tax at the source from your earnings until your income falls into an exempted income range. The restriction is now set at 50,000 Indian Rupees for older persons in a single fiscal year.
By completing Form 15G or Form 15H to the banker, quite an indication is normally expected to be given just at the beginning of the fiscal year. Form 15H is for those who are sixty years of age or older (senior citizens), whereas Form 15G is for all the other individuals whose total income would not produce the limited amount that is exempt from income tax. Form 15H is for senior citizens.