The end of the first quarter of a financial year, which is on June 30, is the time when most depositors get first quarterly interest credited for their fixed deposits. However, this is also the time when TDS is deducted if your interest amount is above the TDS limit. If you do not take timely action to save this TDS deduction you will have to wait for more than a year to file your ITR next year and then wait for few more months to get the refund.
Before going to the savings section let us apprehend how TDS is charged. Usually a business or a co-operative bank or a publish office deduct 10 % TDS on interest from constant credit after interest amount goes above Rs 40,000 in a given economic year for people below 60 years of age. For senior citizens, the limit for TDS deduction goes up to Rs 50,000.
The time total interest quantity crosses the threshold restrict no TDS is deducted however once it goes above the threshold the TDS is deducted not on the quantity simply above the threshold however on the entire interest amount.
Due to coronavirus-led monetary action there has been rest on the TDS amount. This year the TDS quantity will be charged at a reduced price of 7.5%.
If you are eligible to enjoy exemption from the TDS deduction then there is no point in letting the TDS deducted and later getting it refunded. If you are a senior citizen you are eligible for exemption if your tax liability is nil. Even if the income is above Rs 2.5 lakh but not more than Rs 5 lakh you can fill form 15H to save TDS.
A taxpayer being a senior citizen can file Form 15H for a financial year if the tax on his estimated total income for the year, including income for which Form 15H is filed, will be nil. Also, in a case where income of the assessed being a senior citizen, who is eligible for rebate of income-tax under section 87A of the IT Act, is higher than the basic exemption limit, but his tax liability shall be nil after taking into account the rebate available to him.
If you are not a senior citizen then you will have to fill form G if your total taxable income is not more than Rs 2.5 lakh. You must fill the relevant forms before your hobby income crosses the threshold limit.
However, if you did not file Form 15G/H final year then you want to do it as quickly as possible. All tax payers who had or had not filed the Forms in FY20 should file the Forms for the FY21 at the earliest for the final period of the FY21.
You want to provide self-declaration by filling the forms. Assessed can file a self-declaration for non-deduction of tax in Form 15G or Form 15H, as the case may be, under section 197A. Income-Tax Act does now not prescribe any time limit for submitting of such form. Thus, deducted can file assertion for nil deduction at any time. However, it is recommended to file such statement before accrual of interest for first time all through the year.
To show nil tax liability you can get a certificate from Central Board of Direct Taxes (CBDT). The CBDT has prescribed that the utility for limit or nil deduction certificates shall be filed in the direction of the period opening from February 28 of the immediately previous financial year and ending with March 15 of the relevant economic year. Assessed can file an application in Form 13 to acquire the nil or reduce TDS certificates under part 197. Such structure can be filed online under digital signature or through digital verification code.
