How to submit Form 15H, Form 15G to avoid TDS on interest income
If you invest in a taxable investment like a bank fixed deposit (FD), recurring deposit or company deposit, the interest you earn gets taxed.
In most fixed-income products, unless it's a tax-free investment, since the interest income earned during the year has to be added to your income it will be taxed. In other words, the interest income is entirely taxable as per the individual's income tax rate of 5.2 percent, 20.8 percent or 31.2 percent including a surcharge of 4 percent.
The tax will be deducted at source (TDS) by the institution when the interest is paid to the investor. The amount of TDS can be adjusted later by the taxpayer while paying the annual taxes or at the time of filing the income tax return (ITR).
Here is how you can avoid paying TDS on your fixed income investments.
TDS limits The institution will deduct tax at source only when the interest income exceeds a certain limit. If your interest income exceeds Rs 10,000 in a year, the bank will deduct 10 percent as TDS on the entire interest amount. At times, there could be more than one deposit in different branches of the same bank. In such cases, the interest amount is to be added up for TDS purpose. The TDS limit for interest income earned in company deposits is Rs 5,000.
What's new:From April 1, 2018, a new section has been inserted in the Income-tax Act, 1961, 80TTB, that allows a deduction up to Rs 50,000 in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases. The Section 80TTA provides a deduction of Rs 10,000 on interest income from savings account in bank deposits and post office. For them the TDS, therefore, gets deducted only when interest income exce ..
Nature of deposits The frequency of interest i.e. monthly, half-yearly or cumulative payments will not impact the incidence of TDS. The moment TDS accrues in the case of cumulative deposits or gets credited to the savings account of the taxpayer in the case of half yearly deposits, TDS is deducted by the bank provided the interest paid exceeds Rs 10,00 across all branches in aggregate during an FY
How to avoid TDS You can submit a declaration Form 15G or 15H to avoid TDS on interest income. While Form 15G is for individuals below 60 years, Form 15H is for individuals above 60 years of age. One can submit these forms only when the tax on total income is nil and the aggregate of the interest received during an FY does not exceed the basic exemption slab of Rs 2.5 lakh and Rs 3 lakhs for senior citizens and Rs 5 lakhs for super senior citizens.
Penalty for wrong information If you furnish these forms to the bank even if you are not eligible to submit them, you will be penalised. If a taxpayer makes a false declaration in Form 15G or Form 15H, and the tax sought to be evaded exceeds Rs 25 lakh, he could be subject to rigorous imprisonment which could range from 6 months to 7 years accompanied by a fine. In any other case, a taxpayer would be subject to rigorous imprisonment ranging from 3 months to 2 years with a fine under Section 277 of the Income-tax Act.
The table below shows the eligibility conditions.
Online filing One can file these forms online as well instead of submitting them at a bank branch. Find it from your bank if your bank allows filing of Form 15G/H online through Net banking.
Steps to file Form 15G/H online ( May vary across banks) Step 1. Log in to the bank's Internet banking portal with your User ID and Password Step 2. Select Tax Section Step 3. Click on Form 15G/H Step 4. Fill in the necessary details Step 5. Click on Submit Step 6. Download the acknowledgment slip Step 7. Save the Service Request number for your future.
What you should do If you have held the deposit for more than a year, you need to submit a fresh form 15 G/H each financial year. And this should ideally be done at the start of every financial year. More importantly, remember that the interest earned is entirely taxable and hence, fixed deposits will work more like a wealth protection tool rather than one for wealth creation. Stay away from them unless your goal is 1-2 years away or if you are a senior citizen depending on r ..
SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds
For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300
Buy Group Health Insurance Online For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...
Birla Sun Life MIP II Savings 5 - Invest Online Have you traditionally been a debt investor but now wish to test waters in equities? Then, debt-oriented funds such as Birla Sun Life MIP II Savings 5 (Birla Savings 5), which have limited exposure to equities, may fit your requirement. With a five year return of 10.5 per cent compounded annually, the fund managed a good 3-3.5 percentage points more than its benchmark Crisil MIP Blended Index, as well as its category average. The fund appears well poised to capitalise on a falling interest rate scenario and has increased the average portfolio duration of its debt instruments in recent times. Suitability Birla Savings 5 is suitable only for conservative investors. If you want to make a beginning in equities and cannot take any short-term declines in your stride, then this fund will suit you. If you are already an equity investor and want to use a debt-oriented fund merely as a diversifier, then you may prefer peers from the HDFC and Re...
Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 ICICI Prudential Dynamic Plan Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will ...
Invest Mutual Funds Online Download Mutual Fund Application Forms Commercial Paper (CP): These are issued by corporate entities in denominations of Rs.2.5mn and usually have a maturity of 90 days. CPs can also be issued for maturity periods of 180 and one year but the most active market is for 90 day CPs. Two key regulations govern the issuance of CPs-firstly, CPs have to be compulsorily rated by a recognized credit rating agency and only those companies can issue CPs which have a short term rating of at least P1. Secondly, funds raised through CPs do not represent fresh borrowings for the corporate issuer but merely substitute a part of the banking limits available to it. Hence, a company issues CPs almost always to save on interest costs ie it will issue CPs only when the environment is such that CP issuance will be at rates lower than the rate at which it borrows money from its banking consortium. ----------------------...
Invest Mutual Fund Online You have a lump sum in hand and you wish to invest in equity funds. However, you have heard a lot of talk about investing in equity funds through Systematic Investment Plans (SIPs) because they help average costs, ensure you do not ill-time the market, and help you invest in small sums, besides giving you many other advantages. So, should you invest the money you have in hand in one go, or let it remain in your bank account and then do an SIP? There is no harm in investing a lump sum amount. For all you know, compounding, over the long term, could work better with lump sum. However, make sure you fulfill all of these three criteria if you want to invest in one go. Else, SIP is the way to go. #1: You invest for the long term According to past data, ideally, if you have a time frame of 12 years or more, you can consider lump sum investing (provided you satisfy the other two conditions that follow). So, what is the sanctity behind 12 years? Is it because only...
