How to Avoid Tax Deduction on Fixed Deposit’s !!

As per section 194A (3) (I) (a) of the Income Tax Act, 1961, where the amount of interest credited or paid or likely to be credited or paid during the financial year exceeds Rs.10, 000/-, tax has to be deducted at source from the first interest flow itself.But you can avoid it,find out how.. ??

Recently IT Dept. has issued new format of Form 15G/H which has to be filed for the Assessment year 2012-13.

What is Form 15G/H

• These forms are used for non deduction of Tax at source(TDS) by the party giving interest on such deposits like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units.Form 15G/H is a type of declaration to be filed by an individual or a person (not being a company or the firm)

Difference between Form 15G and 15H

• Both the Forms are same. The difference is only that Form 15G has to be filed by persons below 60 years of age and Form 15H has to be filed by persons above 60 years of age. 

• Here, the word person refers to individual or person (not being a company or firm). So, HUF and Association of Persons can also use this form.

Certain points require strict attention regarding Form 15G/H:

• PAN number is mandatory from 01/04/2010.

• It should be deposited at the beginning of each Financial year.

• These Forms are deposited in two copies, one of which is forwarded to the Income Tax department. So, the Income Tax Authorities can make further inquiries regarding the same income.

• These Forms should be deposited at each and every branch where the deposit has been made. For example, if you have made deposits at three different branches of Axis Bank, then you have to submit the Forms at each branch separately.

Awesome Book On Income Tax in India..!!

• These Forms can only be used for payments like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units. For other types of payments, these forms cannot be used.

• Irrespective of the fact that Form:15G/H has been filed or not, such income has to be mentioned under proper head while filing the return.

• These Forms are not applicable for NRIs.

• If anyone has opted for monthly interest, he should deposit the Form at the start of financial year compulsorily as the TDS could be done from the starting month itself if he fails to submit the same

Range of Benefits of Form 15G/H

• The maximum amount which is not chargeable to income tax, relevant for declaration in Form 15G/15H, is as mentioned below:

• Individuals up to age of 60 -   Rs.2, 00,000/-

• HUFs, Trusts & Associations -  Rs2, 00,000/-

• Individual with age 60 years and above but less than 80 years. (DOB shall be either on or before 31/03/1954 but after 31/03/1934) -  Rs.2, 50,000/-

• Individual customers with age 80 years and above. (DOB shall be either on or before 31/03/1934) -  Rs.5, 00,000/-

The Bottom Line..

• Very few people know the implications of filing Form 15G/H and other important facts related to this Forms. So, understanding the use of Form 15G and H, one can make sure that the tax for which he is not liable, does not get deducted at source by the party giving interest on such deposits.