Avoid your TDS by submitting form 15G and 15H

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Avoid your TDS by submitting form 15G and 15H Posted: 19 Jun 2011 06:17 AM PDT ( from Jago Investor) Suppose your Father has invested Rs 20 lacs in a Bank FD . He gets interest @8% , that's Rs 1.6 lacs per year . Now ideally he is not supposed to pay any tax on this because this income is less than the limit . But bank cuts the TDS @10% and pays Rs 16,000 to the govt as TAX (Note that TDS is cut only when interest income is more than 10,000) . To get back this 16,000 back , your father will have to file tax return and then wait for the tax refund to come back . Is there a simple solution to this problem ? Yes … read on . What is TDS TDS means tax deducted at source , what it means is that instead of paying tax at the end of the year , the tax will be levied on the income as and when it arises and hence taken in advance with assumption that anyways the tax has to be paid later . So TDS will arise when your salary comes , when interest of your bank account comes , winning of Lottery and many such things, the rate at which TDS is cut varies from one thing to another and also its different for Resident Indian and NRI's . Note that in case of Bank deposits , the TDS rate is 10% provided one has furnished his PAN details , otherwise if PAN details are missing the TDS rate is 20% , where as for NRI's who earn interest on their NRO's account are subject to 30% TDS . LESSON – 15 TAX DEDUCTED AT SOURCE Form 15H & 15G Let me tell you what are form 15H and 15G . In one line , These forms are self declaration forms to be submitted if total taxable income of a person is going to be less than the permissible limits . So if a person is sure that he will not be required to pay any tax in a particular year , then he can submit for 15H or 15G to avoid deduction of TDS from his interest income and other kind of incomes where TDS is applicable . Form 15H can be submitted by a person who is above 60 yrs (w.e.f 1/4/11) . An important point here is that a person should have not have paid any tax in the previous year . So only if one didn't have any tax liability in previous year can submit form 15H . It should be submitted at the start of the year itself , so that TDS can be avoided , there is no point in submitting this at the end of financial year because by then TDS would be cut anyways . Form 15H can not be submitted by HUF's . Form 15G has the same purpose as Form 15H , just that this form should be submitted by a person below 60 yrs old (w.e.f 1/4/11) . Also this form can be submitted by HUF's . Rest all things are common between 15G and 15H . Are these forms applicable to you ? Can you share something which is not covered here ?