As per the TDS rules,
if interest income exceeds Rs 10,000 in a financial year, 10% tax will be
deducted at source. If PAN is not submitted then the TDS rate will be 20%. However,
investors with total taxable income below the basic exemption limit can submit
a declaration in Form 15G/15H to avoid TDS. These forms have to be submitted in
duplicate.
·
Form 15G: This is for individuals
below 60 years, HUFs and trusts, etc.
·
Form 15H: This is for Senior citizens
and those above 80 years.
To avoid TDS it is
advisable to submit the Form 15G/15H at the beginning of the year
itself. From FY 2013-14, the IT Department has made some changes in the forms. In
the old form one only had to declare that one's income was below the taxable
limit and therefore TDS should not be deducted.
The new forms
require some additional information on income from all sources and tax
deduction availed of during the financial year. One must also mention the
expected taxable income in the financial year from all income heads like
salary, interest, capital gains, rent etc. The assessee can avoid disclosure of
the tax-free incomes like interest from PF, PPF and tax-free bonds.
Now let us check
whether you are eligible to submit the Form 15G or 15H. An individual or HUF
must satisfy two conditions:
Condition 1: The
estimated taxable income for the financial year should be less than the basic
exemption limit. This is Rs 2 lac for individuals below 60 years and HUFs, Rs
2.5 lac for senior citizens, and Rs 5 lac for very senior citizens above 80
years.
Condition 2: This is
applicable only to Form 15G. The total interest income from all sources should
not exceed the basic exemption limit. This condition does not apply to senior
citizens because most retired people get their maximum income from interest.
The forms also
require the assessee to furnish details of other incomes, like dividend from
shares and mutual funds. Although dividend income is tax-free the IT Department
still wants to know how much you earned from them.
