The Nawanshahr Central Cooperative Bank Ltd.


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Tax Deducted at Source

According to the TDS rules, if interest income exceeds Rs 10,000 in a year, 10% tax will be deducted at source. If the investor has not furnished his PAN details, the TDS rate will be higher at 20%. However, if the investor's total taxable income is below the basic exemption limit, he can submit a declaration to avoid TDS. Form 15G is to be used by individuals below 60 years, HUFs and trusts, etc.Senior citizens and those above 80 years must use Form 15H. 
When can the bank deduct tax at source?
Before I explain as to who can submit form no. 15 G and who can submit 15 H, let us first understand when bank deducts tax on the interest payable. The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 10,000 in a financial year.
This limit of Rs. 10,000 is applicable for each branch of a bank and not for all the branches of a bank taken together. So each branch of the bank will see whether the interest for the whole year on all the FDs exceed the threshold of Rs. 10,000.
One interesting point to be noted here, which many people are not aware, is that banks are not required to deduct any TDS on interest credited on your savings bank account even the amount of interest may be very substantial.
Please note that in case of fixed deposits made for longer duration where the interest will be paid to you only on maturity, the bank will deduct tax at source on the interest accrued for the year even though no interest in fact has been paid to you.
Who can submit form No. 15G?
First and foremost only a person who is resident in India can submit form No. 15G. So an NRI cannot submit this form.  Any person other than a Company can submit form No. 15 G. So any Individual and HUF can submit form No. 15G.
However it is not that every Individual or HUF can submit form No. 15G. Only the individual or HUF, whose tax on the estimated income for the year is nil and the amount of interest income from all the sources does not exceed the minimum exemption limit, can submit this form.
So for being eligible for you to submit this form, you need to satisfy both the above conditions. In a situation where due to various deductions the tax payable on total income may be nil but if the total amount of interest income is expected to exceed Rs. 2 lacs you cannot submit this form.
Who can submit form No. 15H?
Any resident Individual who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H provided his tax liability on the basis of his estimated income is nil for the financial year though the total amount of interest from all sources may exceed Rs. 2.50 lacs, the minimum amount liable for tax. So only senior citizens can submit this form.
What precautions to be taken while submitting form no. 15G and 15H?
Please ensure to submit your PAN details to the bank while submitting the form No. 15G or 15 H. In case you fail to provide your PAN number to the bank, the bank will deduct TDS @ 20 percent against the applicable rate of 10 percent even if you have submitted form no. 15G and 15H.
I would advise you to submit a copy of your PAN card by way of separate letter and obtain written acknowledgement for the same.
Please obtain acknowledgement for form no. 15 G or 15H while submitting it. So it is advisable to get the form submitted personally rather than sending it through post so as to ensure proper acknowledgement
What if the bank has already deducted tax before submission of the form?
The form no. 15G or 15H as the case may be, should be submitted at the beginning of the year so as to avoid a situation where bank has already deducted the tax before you submit the form. However in case the bank deducts the tax in spite of you having submitted the form or before you actually submit the same, the bank will not refund the tax already deducted, as the bank would have already deposited the tax with the government. In such a situation the only option available with you is to file your income tax return and claim the amount of TDS a refund.

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