TDS is charged at 10 per cent on the interest received on fixed deposits. If the depositor does not provide his PAN card, then the TDS rate is 20 percent.
If you do not provide a PAN card, you get 20% tax on the interest you get from the FD.
Fixed deposits are considered to be the best and popular option to get a fixed return on savings. In FD, investors get the assurance of capital as well as returns. However, interest on FD is fully taxable. Meaning, tax is to be paid on the interest you get from investing in FD. This is the reason why some people also avoid investing in FDs.
It is the responsibility of banks to deduct TDS on the interest received on FD. However, if your income is less according to tax slabs, then you do not even need to pay tax on this interest. Banks deduct 10% interest on their FDs from people with taxable income. If the depositor does not provide his PAN card to the bank, then the banks deduct tax at the rate of 20 percent.
How will FD be saved?
In such a situation, banks have an option to refrain from deducting tax on the interest received from FD. For this, you have to tell the bank that your income is less than the taxable limit. For this, Form 15G and 15H will have to be submitted to the bank. These are self declaration forms, in which you tell that you are not earning enough to collect tax from you. People below 60 years have to fill Form 15G. However, people above 60 years of age have to fill Form 15H.
When do I have to fill Form 15G or 15H?
You have to submit this form in your bank at the beginning of the financial year. Suppose you want to avoid paying TDS for FY 2022 and fall in the tax exemption category, then you will have to submit this form in your bank now. You have to submit this form in all the banks where your deposit is.
Tax exemption is available on how much earnings
If a person is below 60 years and their annual income is Rs 2.5 lakh or less, then they do not have to pay tax. For people over 60 years and below 80 years, this tax exemption limit is 3 lakh rupees. People above the age of 80 years get tax rebate of Rs 5 lakh per annum.
Also read: How much does a wife get in husband’s family property? Know your rights if you are a woman
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