Skip to main content

How to avoid TDS ?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

Submit your declaration well in time to avoid paying tax on the interest income



Delayed tax refunds can be frustrating. After all, what can be worse than waiting for your own money to come back to you? This is why financial advisers suggest planning one's taxes well in advance and avoid overpayment. The start of the financial year is, perhaps, the best time to do so. Submit the Forms 15G or 15H right away to avoid the tax deducted at source (TDS) on your investments, if your income is below the exemption limit.


From this year onwards, the IT Department has introduced some changes in the two forms. You now have to give additional information on income from all sources and tax deduction availed of during the financial year.


According to the TDS rules, if interest income exceeds 10,000 in a year, 10% tax will be deducted at source. If the investor has not furnished his PAN details, the TDS rate will be higher at 20%. However, if the investor's total taxable income is below the basic exemption limit, he can submit a declaration to avoid TDS. Form 15G is to be used by individuals below 60 years, HUFs and trusts, etc. Senior citizens and those above 80 years must use Form 15H. Till now, one only had to declare in the form that one's income was below the taxable limit and, therefore, the TDS should not be deducted. Now, however, one must also mention the expected taxable income in the financial year. This includes income from salary, interest, rent and capital gains. One can avoid the tax-free income like interest from the PF, the PPF and tax-free bonds.


Are you eligible?


Before you rush to submit the Form 15G or 15H, make sure that you are eligible. An individual or HUF must satisfy two conditions. First, the estimated taxable income for the financial year should be less than the basic exemption limit. This is 2 lakh for individuals below 60 years and HUFs, 2.5 lakh for senior citizens, and 5 lakh for very senior citizens above 80 years.


The second condition, which is applicable only to Form 15G, is that the total interest income from all sources should not exceed the basic exemption limit. Senior citizens have been exempted from this condition because most retirees get the biggest chunk of their income from interest.


These conditions are not new. The only difference is that now the individual has to specifically mention his expected income in the form. In the table below, we look at the various situations in which an individual is eligible to file the declaration.
These forms also require the individual to mention details of other incomes, including dividends from shares and mutual funds. The new forms seem to have been made with all the possible situations in mind. As of now, the dividend is tax-free, but may be taxable in the future.


Err on the side of caution


The TDS rules can be cumbersome, but you just have to take them in your stride. The Forms 15G and 15H have to be submitted at every branch of the bank where you have a deposit. Though the threshold limit of 10,000 a year is per branch, some banks insist on a form to be submitted even when the interest is less than 10,000 in that branch. A bank can track you using the unique customer ID. If the combined interest in all branches is above the 10,000 limit, TDS will be deducted if you have not filled the Form 15G or 15H. It is best to provide the form than risk TDS. Once the tax has been deducted, it can only be reclaimed by filing your income tax return.


The worst affected are investors who are not eligible to file Form 15G because their interest income is above the threshold limit even though their total taxable income is not liable to tax. One option for such people is to allow the banks to deduct the TDS. They can then reclaim the amount by filing their tax returns. This is a cumbersome process and, therefore, not worth undertaking.


The second option is to split the fixed deposits across several banks and branches so that the TDS exemption limit is not breached. This is no less tedious because you will have to go to multiple locations. Besides, it increases your paperwork manifold. There may also be cases of a small tax liability which makes an investor ineligible for filing these forms. You can handle this by letting one bank deduct the TDS so that the amount takes care of your total tax liability. However, the above strategies are only meant to avoid TDS, not avoid tax or file your tax return. You may be required to file your tax return if your total income before the deductions is above the basic tax exemption limit.


Besides, there is a stiff penalty for furnishing incorrect information in the form just to avoid the TDS.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Rs 14,000 Crore worth of tax free bonds coming soon from NHAI , PFC

  NHAI, PFC file prospectuses, coupon rate not yet decided MORE debt investment options have opened up for investors with AAA rated tax-free bonds worth over Rs 14,000 crore lined up. The National Highway Authority of India ( NHAI ) and Power Finance Corporation ( PFC ) are offering Rs 10,000 crore and Rs 4,033.13 crore worth of tax-free bonds, respectively, as per prospectuses filed with the Securities and Exchange Board of India (Sebi). Of a Rs 5,000 crore issue by PFC, Rs 966.87 crore has already been raised through private placement on September 28 and November 1. Tax-free bonds give investors tax-free return on any amount invested. In another kind of bonds, the long-term infrastructure bonds, investments up to Rs 20,000 are tax exempt, that is this cap amount can be deducted from the taxable income. Accordingly, the NHAI prospectus has clarified that only the amount of interest from -and not the actual investment on -its new bonds will be tax-free. "NHAI's publ...
Read more

Change in Fund Manager for some of HSBC Mutual Fund Schemes

Buy Gold Mutual Funds Invest Mutual Funds Online Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) However, this facility is only available to Unit holders who have been assigned a folio number by the AMC.   HSBC Mutual Fund has announced that the below mentioned schemes shall be managed by the new fund managers as stated in the table. The effective date will be July 02, 2012.   Amaresh Mishra 's will be Vice President and Assistant Fund Manager. Having done a Post graduate diploma in Business Management and Bachelor of Chemical Engineering, he has over seven years of experience in Equities and Sales.   Mr. Piyush Harlalka's designation shall be Vice President- Fixed Income. Qualified as a C.A., C.S. and holding M.B.A.( Finance degree), he has over six years of experience in Fund management and ...
Read more

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...
Read more

Personal Finance: You can insure your wedding

But luck may not always be on your side. With the frequency of such attacks, as also other risks and unforeseen accidents growing, a wedding insurance is something you may want to look at if a marriage is being planned in the family. Event insurance plans like this is still in its nascent stages due to low awareness. And given the sacred nature of the ritual, nobody wants to discuss or think negative. But as wedding spends and risks grow, it makes sense to cover the potential monetary loss. The policy in those countries even covers the loss of the wedding ring, the wedding gown not reaching on time and even the expenses/loss due to late or non-appearance of the photographer which may mean staging the event once again for the photograph. In India, most insurance companies — including ICICI Lombard General Insurance, Oriental Insurance, Bajaj Allianz and National Insurance — offer wedding insurance. The policy is tailor made to individual requirements and needs. The sum insur...
Read more

DSP BlackRock MidCap Fund

Best SIP Funds Online   HOW HAS DSP BlackRock Small & Mid Cap Fund PERFORMED? With a 10-year return of 14.61%, the fund has outperformed both the category average (12.34%) and the benchmark (10%) by a good margin. Should you invest in DSP BlackRock Small & Mid Cap Fund? This fund invests predominantly in mid-cap stocks but takes a sizeable exposure in small-caps as well. The focus is on nascent companies with high growth potential. The fund manager places emphasis on quality and avoids inferior businesses even if these look tempting from a valuation perspective. Over the past year, the fund portfolio has grown, having added to some of the underperforming sectors like chemicals and healthcare. Its portfolio churn has come down significantly. The heavily diversified portfolio is run completely agnostic of its benchmark index— most bets are from outside the index—which can at times lead to bouts of underperformance as seen in the recent years....
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now