Any interest earned against your fixed deposits invested below or above 5 years is taxable, and your financial institution of NBFC will calculate the TDS or Tax Deducted at Source at the end of each financial year. In case the interest earned is less than Rs. 10,000, you can claim tax deductions using specific forms.
There are two types of forms that you can submit to prevent TDS deduction for the interest earned on your fixed deposits. These forms are –
- Form 15G – You can file TDS using this form if your annual income (salary) does not cross the tax exemption limit set by the Income Tax Department (annual income threshold currently stands at Rs. 2.5 Lakh). You cannot file 15G on behalf of your company or if you are above the age of 60 years.
- Form 15H- Form 15H is specifically for individuals above the age of 60 years and should be a resident of India.
How is your interest income taxed?
Interest income from fixed deposit/s is considered as ‘Income from Other Sources.’ The TDS will be deducted by your financial institution or NBFC at the time they credit the interest. After you file form 15G or form 15H, the Income Tax Department will adjust the TDS from the net tax payable.
One of the benefits that you need to know about TDS on fixed deposit earnings is- senior citizens are exempted from income tax on the interest earned via fixed deposits. They can file form 15H at the end of each financial year to claim tax benefits.
How to download these forms?
You can download these forms on the official website of your financial institution or NBFC. Alternatively, you can also download the forms from the official portal of the Income Tax Department.
How to fill Form 15G and 15H?
One of the benefits of Form 15G/H is the online process.
Form 15G is divided into two parts out of which the first part is filled by you to claim deductions and the second part is filled by the deductor (financial institution or NBFC).
Given below are some ways on how to fill Form 15G and form 15H to claim deductions.
Step 1. Log in to the official website of your financial institution or NBFC.
Step 2. Access your online account using your user ID and password.
Step 3. Click on the tax section to access the forms.
Step 4. Click on form 15G or 15H as per your requirements and fill the details.
Step 5. Click on the ‘submit’ option to receive an acknowledgement slip.
Step 6. Download the acknowledgement slip and save your service request number.
What are the details that you have to provide?
- Your name as mentioned on your PAN card.
- Your permanent account number or PAN.
- A declaration that you are an individual and not any company or firm.
- Residential address (you will have to be a resident of India; NRIs are not allowed to file form 15G/ form 15H). You are required to provide your flat/block/house number, street name or number, locality, city, state, PIN, etc.
- Your contact details (phone number and email ID.)
- Declaration if you were assessed for tax under the provisions of the Income Tax Act in any of the previous years.
- Your annual income details.
Assured substantial returns and a risk-free investment avenue are among the top reasons why fixed deposits are a better investment option than mutual funds.
Several financial institutions offer such deposits at attractive interest rates to maximise earnings. Bajaj Finance provides Fixed Deposit at attractive interest rates of up to 8.85% with flexible tenor options. You can easily use forms 15G and H for TDS returns from the lender’s official website.
Note that the form 15G and form 15H are applicable for a year, and hence you are required to submit the form each year to claim tax benefits. Also, if you invest in a fixed deposit for five years you there will be no tax deductions.