At present times, The only investment option available for a common man is Fixed Deposits with Banks because this is a hassle free option and does not require so much of compliances. Investing in Fixed Deposits does not let you to assume any type of Risk.
But where there is an Income there is a Tax and most of the people are aware about the Form 15G/15H.
But there is a scope as well as a polished tax planning by investing in this investment option. Generally, 15G is concerned with the non tax payers who are below the age of 60 years and 15H is related with the non tax payers aged above 60 years. As per sec 197 of Income Tax Act, 1961 Deduction of tax at source – Certificate of lower deduction or non-deduction of tax at source, One has to submit a duly filled aforesaid certificate in Banks and Financial Institutions to avoid the TDS provisions as per Chapter XVII of Income Tax Act, 1961.
The one interpretation that can be drawn from the bare reading of sec 197 of Income Tax Act, 1961 would be beneficial for the persons who are more faced towards investing in Fixed Deposits is the 15G Form is not valid in a case where the amount of Interest receivable by such banks and financial institutions is more than the maximum amount not chargable to income tax i.e. Slab Rate but this type of provision would not be applicable in case of Form15H. So how this interpretation will help the ordinary men can be explained with the help of following example.
Suppose Mrs. Sita aged about 35 years is house wife and is going to receive Rs. 3,10,000 in F.Y. 2014-15 and she has no any other source of income, as total interest receivable by her is more than the maximum amount not chargable to income tax which concludes her to pay income tax according to the slab rate applicable on her. The one tax planning that she can do is to take FD in name of her mother or mother in law as the case may be who also has no other source of Income and to receive the tax free income only by submitting a duly filled Form 15H in banks and financial institutions because the Form 15H is acceptable even if the assessee has total amount of interest more than the slab rate.
By
Abhinav Nagar
CAclubindia
