Authors: JordanInterest income gets taxable when it crosses Rs 10,000, and Rs 50,000 in case of senior citizens When you are entitled to receive interest from banks, they are supposed to deduct the tax deducted at source (TDS) before crediting the interest to your account.
The TDS is meant to be deducted when the interest income shoots beyond Rs 10,000 per annum.
However, when you are not liable to pay income tax, then you can inform the bank by submitting the form 15G/ form 15H and avoid paying the income tax in form of TDS.Want To Avoid TDS On Bank Interest Five Things To Know1.
If your annual interest from bank account is less than Rs 10,000, then you don't need to pay any tax on it.
So, there is no need to fill the form 15G which is essentially meant to prevent the bank from deducting the TDS.2.
In case of senior citizen tax payer, the interest income should be more than Rs 50,000 for this to become taxable.
So, in case the interest income is less than Rs 50,000 then s/he doesn't need to fill up the form 15H since the TDS is not taxable anyway.3.
It's only when your total income is not taxable that you become entitled to the exemption from paying the TDS.
The total income is not taxable when it's less than Rs 2,50,000 in case of individual less than 60 years of age and Rs 3,00,000 in case of senior citizens.
So, the need to fill up form 15G arises when your income is less than Rs 2,5 lakh (or Rs 3 lakh) but interest is more than Rs 10,000/ Rs 50,000.4.
The form 15G or 15H, as the case may be, must be submitted to not only to the bank but also to the companies issuing bonds, EPFO (Employee provident fund organization), and to the non-individual tenants, but only in the cases when your income is not taxable.5.
You must make sure that your interest income doesn't exceed the tax exemption limit of Rs 2.5 lakh to be able to claim exemption from the TDS.
When your total income is less than Rs 2.5 lakh, but the interest income alone exceeds Rs 2.5 lakh then you are not entitled to fill up form 15G.