Have you ever noticed small deductions on your bank statements? Well, that is called Tax Deducted at Source (TDS), where the bank collects a tax from your income itself. While it makes collecting tax hassle-free, at your end, this might not always be advantageous, particularly when your overall earnings are less than the taxable limitation. However, the good news is that by submitting Form 15H, you can save tax on these deductions. Curious to know how? Let’s take a look.
What is Form 15H?
Form 15H is a declaration form you can submit to your small finance bank, traditional bank, or any other financial institution claiming an exemption from TDS deduction on interest income. This form is particularly for senior citizens, which means Indian residents of the 60 and above age group. You can use the 15H form to avoid the deduction of TDS from your interest income by banks, small finance banks, or any other financial institution subject to certain eligibility criteria.
This form is a simple yet powerful tool that allows eligible individuals to manage their cash flow better by avoiding premature tax deductions. But how does this work exactly? Let’s explore.
How Does Form 15H Help You Save TDS on Interest Income?
When you earn interest income from fixed deposits, recurring deposits, or any other savings scheme, banks are mandated to deduct TDS at a rate of 10% if the interest exceeds a certain threshold. For senior citizens, this threshold is Rs. 50,000 per annum. If you submit Form 15H, you are essentially declaring that your total income is below the taxable limit, and therefore TDS should not be deducted.
This declaration helps you in two major ways:
- Immediate Financial Relief: By preventing TDS deductions, you have immediate access to your entire interest income without waiting for a tax refund. This can be particularly helpful for those who rely heavily on interest income for their monthly expenses.
- Simplified Tax Process: You avoid the hassle of claiming a refund while filing your income tax return, making your tax process smoother and less cumbersome.
It’s important to note that submitting Form 15H does not exempt you from paying taxes if your income exceeds the taxable limit. It merely helps to manage your cash flow and avoid unnecessary deductions.
Who Can Use Form 15H?
Form 15H is specifically designed for senior citizens aged 60 years or above. To be eligible, you must meet the following criteria:
- Age: You must be 60 years or older in the financial year for which the form is being submitted.
- Income Threshold: Your total income, including interest income, should be below the basic exemption limit specified by the government. This limit is subject to change, so it’s essential to stay updated.
- Form Submission: The form should be submitted at the beginning of the financial year or before the first interest payment to ensure that TDS is not deducted at all.
If you meet these criteria, you can submit Form 15H to each institution where you have interest-bearing deposits. Remember, the onus of declaring the correct information lies with you, and any false declaration can attract penalties.
Conclusion
Navigating the tax landscape can be daunting, but with tools like Form 15H, it becomes a bit more manageable, especially for senior citizens who depend on their interest income. By understanding how this form works and ensuring that you meet the eligibility criteria, you can save on unnecessary TDS deductions, maintain your cash flow, and simplify your tax process.
So, the next time you spot TDS on your bank statement, remember that a little proactive planning with Form 15H can go a long way in optimizing your financial health.
