How to Avoid TDS Deduction on Fixed Deposits: A Step-by-Step Guide
Learn how to prevent TDS deductions on your Fixed Deposits using Form 15G or 15H effectively.
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Submit Form 15G/15H: To avoid TDS deduction on a Fixed Deposit (FD), you can submit Form 15G (if you are below 60) or Form 15H (if you are 60 or above) to your bank at the beginning of the financial year. This form declares that your total income is below the taxable limit, thus exempting you from TDS.
FAQs & Answers
- What is Form 15G and who can submit it? Form 15G is a declaration form that individuals below the age of 60 can submit to their bank to avoid TDS on interest income from Fixed Deposits. It certifies that the individual's total income is below the taxable limit.
- What is Form 15H and who is eligible to use it? Form 15H is a declaration form meant for senior citizens (aged 60 or above) to avoid TDS on Fixed Deposit interest earnings. It similarly states that their total income is below the taxable threshold.
- How does TDS on Fixed Deposits work? TDS, or Tax Deducted at Source, is applicable on the interest earned from Fixed Deposits if it exceeds a specified limit. Banks are required to deduct TDS if the interest income during a financial year surpasses ₹40,000 for individuals and ₹50,000 for senior citizens.
- When should I submit Form 15G or 15H? It's advisable to submit Form 15G or Form 15H at the beginning of the financial year to ensure that TDS is not deducted throughout the year on your Fixed Deposit interest income.