Refund of tax deducted at source

Interest earned from deposits with banks and non-banking finance companies are paid out only after tax deducted at source (TDS). TDS is applicable if the interest income exceeds a specified level. Currently, this is Rs 10,000 for deposits with banks and Rs 5,000 for deposits with NBFCs.

The investor discloses TDS paid at the time of filing returns, by submitting the certificate of deduction which is received from each entity that has deducted TDS. The individual has to then apply for a refund of tax paid as TDS. The reduced income due to the TDS and the delay in receiving refunds may be difficult for people who depend upon the income from fixed deposits to meet their regular income needs.

For such investors, TDS on interest receipts can be avoided by submitting a declaration in forms 15H or 15G, as applicable, to the entity that is deducting the tax.

Forms: Form 15H is applicable to senior citizens of 65 years and above. Form 15G can be used by any individual. It can be downloaded from https://tinyurl.com/3fuy3ce

Declaration: 15H applicant must declare that there is no tax liability on income in the given year. For 15G applicants, apart from nil tax liability, dividend income, interest on securities, etc must not exceed basic exemption limit for taxation.

Submission: The form must be submitted to each tax deductor. In case you have deposits in multiple branches of a bank, it has to be submitted to each branch.

Verification: The individual must declare that the information on income and tax liability provided in form 15H/G is true and complete.

Points to note

Forms in duplicate: The forms have to be submitted in duplicate to each entity who will deduct tax at source.

Consolidation: Although forms can be submitted at any time of the year, it should ideally be submitted at the beginning of the financial year to avoid TDS.

Change in e-mail: If the information submitted is found to be deliberately misleading to avoid tax, the individual is liable for prosecution and penalty under the Income Tax Act.

The content is courtesy Centre for Investment Education and Learning (CIEL).

Source : https://articles.economictimes.indiatimes.com/2011-06-06/news/29626050_1_tax-deductor-form-15g-tds